The stock market turmoil caused by rising inflation and the Federal Reserve’s hawkish policies didn’t see an end in 2023. Amid uncertainty, the demand for stable, mature and reliable stocks increased. That’s why major, large-cap companies are clearly beating small-cap stocks this year. The S&P 500 was up 7.3% year to date, while The S&P SmallCap 600 was down 3.3%, as of May 16. A recent WSJ report quoted data from Dow Jones Market Data which showed that this spread of 10.6% percentage points shows the S&P 500's biggest outperformance through May 16 since 2020.
Hedge funds are also upping their bets on blue chip stocks. Insider Monkey’s database of 943 hedge funds updated to reflect the Q1 portfolios shows that major blue chip companies remain popular among the elite hedge funds in the US. Technology sector remains the most favorite area to invest in for smart money investors.
For this article, we scanned Insider Monkey’s database of 943 hedge funds and picked 15 blue chip stocks with the highest number of hedge fund investors.
Berkshire Hathaway Inc. (NYSE:BRK-B) ranks 15th in our list of the best blue chip stocks to buy according to hedge funds. Out of the 943 hedge funds in Insider Monkey’s database, 108 funds had stakes in Berkshire Hathaway Inc. (NYSE:BRK-B) as of the end of the first quarter.
Berkshire Hathaway Inc. (NYSE:BRK-B)’s operating earnings in the first quarter jumped 13% year over year in the first quarter, fueled by growth in insurance underwriting and investment income. Berkshire Hathaway Inc. (NYSE:BRK-B) bought back about $4.4 billion worth of its stock during the quarter.
Number of Hedge Fund Holders: 108
Netflix, Inc. (NASDAQ:NFLX) had been under pressure amid rising competition and subscription growth challenges. But Netflix, Inc. (NASDAQ:NFLX) is taking strong steps to spur growth. That has caused a 21% growth in its stock price in 2023 through May 26. Reports suggest that Netflix, Inc. (NASDAQ:NFLX) has started its crackdown on password sharing in the US.
A total of 108 hedge funds tracked by Insider Monkey were long Netflix, Inc. (NASDAQ:NFLX) as of the end of the first quarter. The biggest stakeholder of Netflix, Inc. (NASDAQ:NFLX) in this period was Boykin Curry’s Eagle Capital Management which owns a $1.5 billion stake in the company.
Number of Hedge Fund Holders: 112
JPMorgan Chase & Co. (NYSE:JPM) was perhaps one of the biggest beneficiaries of the regional banking collapse seen earlier this year as people withdrew their funds from smaller banks and flocked to large banks like JPMorgan. JPMorgan Chase & Co. (NYSE:JPM) is up about 4% over the past one year. JPMorgan Chase & Co. (NYSE:JPM) is also a dividend payer. It recently announced a quarterly dividend of $1 per share, which is payable on July 31 for shareholders on record as of July 6.
A total of 112 hedge funds had stakes in JPMorgan Chase & Co. (NYSE:JPM) as of the end of the first quarter, according to Insider Monkey’s database. The biggest stakeholder of JPMorgan Chase & Co. (NYSE:JPM) was Ken Griffin’s Citadel Investment Group which owns a $697 million stake in the company.
Number of Hedge Fund Holders: 116
UnitedHealth Group Inc. (NYSE:UNH) ranks 12th in our list of the best blue chip stocks to buy according to hedge funds. In April UnitedHealth Group Inc. (NYSE:UNH) posted solid Q1 results. Adjusted EPS in the quarter came in at $6.26, beating estimates by $0.18. Revenue in the quarter jumped about 14.7% year over year to $2.12 billion.
A total of 116 hedge funds tracked by Insider Monkey had stakes in UnitedHealth Group Inc. (NYSE:UNH) as of the end of the first quarter, up from 110 funds in the previous quarter. The biggest hedge fund stakeholder of UnitedHealth Group Inc. (NYSE:UNH) was Rajiv Jain’s GQG Partners which owns a $2.3 billion stake in the company.
Alger Spectra Fund made the following comment about UnitedHealth Group Incorporated (NYSE:UNH) in its Q1 2023 investor letter:
“UnitedHealth Group Incorporated (NYSE:UNH) is an integrated healthcare benefits company uniquely positioned to address rising healthcare costs for its customers, due to its vertical integration, size, and scale. The Optum health benefits services unit, which accounts for approximately 45% of the company’s operating earnings, in our view, has the potential to grow even further as customers look for ways to manage rising healthcare costs. During the period, shares detracted from performance due to several factors: 1) many 2022 healthcare winners with shorter duration profiles and persistent earnings profiles, such as UnitedHealth Group. underperformed in the first quarter of 2023, 2) uncertainty surrounding Medicare Advantage reimbursement levels from the Federal government in 2023, which will be determined later in the year, and 3) increased regulatory scrutiny in the form of potential Medicare Advantage audits across the industry. While these concerns have impacted UnitedHealth in the near-term, we believe company fundamentals remain intact given its large scale business model, competitive advantages, and medium to long- term growth prospects.”
Number of Hedge Fund Holders: 128
Hedge funds are initiating stakes in Alibaba Group Holding Limited (NYSE:BABA) amid signs that the Chinese ecommerce retailer could rebound in the near future. Alibaba Group Holding Limited (NYSE:BABA) recently denied rumors circulating in the media that it was planning to cut 20% of its workforce. Instead, Alibaba Group Holding Limited (NYSE:BABA) plans to hire 15,000 people this year, according to a report from Reuters. Earlier in May Alibaba Group Holding Limited (NYSE:BABA) posted its fiscal Q4 results. Adjusted EPADS for the fourth quarter came in at $1.56, beating estimates by $0.21. Revenue jumped 2% year over year to $30.32 billion, beating estimates by $410 million.
128 hedge funds reported stakes in Alibaba Group Holding Limited (NYSE:BABA) at the end of March, up from 117 funds at the end of the fourth quarter of 2022.
L1 Long Short Fund made the following comment about Alibaba Group Holding Limited (NYSE:BABA) in its Q1 2023 investor letter:
“Alibaba Group Holding Limited (NYSE:BABA) (Long +16%) shares performed strongly based on favourable sentiment surrounding China’s re-opening and indications from Chinese authorities that the prolonged restructuring process of Alibaba/Ant Financial was finally drawing to a close. The company remains a high-quality business with leading positions in both eCommerce and Public Cloud. We exited our position in January at around US$116 per share with the shares having rallied more than 90% since their early November lows and our China re-opening catalyst having played out. We subsequently re-entered the position in March with the shares having pulled back and with the company announcing a new organisational and governance structure. Alibaba has announced plans to split into six major business groups – Cloud Intelligence, Taobao Tmall, Local Services, Global Digital, Cainiao Smart Logistics and Digital Media and Entertainment Group. Each of these groups will be managed independently (separate CEO and board) and have the flexibility to raise external capital and potentially pursue separate IPOs. We believe this announcement is a strong catalyst to unlock the inherent sum-of-the-parts valuation discount in the company.”
Number of Hedge Fund Holders: 131
Perhaps no list of top blue chip stocks could be complete without Apple Inc. (NASDAQ:AAPL). Insider Monkey’s database of 943 funds shows that 131 hedge funds had stakes in Apple Inc. (NASDAQ:AAPL)at the end of the March quarter. Warren Buffett has an eye-popping $151 billion stake in Apple Inc. (NASDAQ:AAPL). Year to date Apple shares have gained about 38% through May 26.
However, Loop Capital recently cut its rating for Apple, citing data that suggests Apple Inc. (NASDAQ:AAPL) has slashed its iPhone shipment estimates for the second quarter. Nonetheless the firm made no changes to its $180 price target for Apple Inc. (NASDAQ:AAPL) which is still up from the May 26 stock price of around $173.
Alger Spectra Fund made the following comment about Apple Inc. (NASDAQ:AAPL) in its Q1 2023 investor letter:
“Apple Inc. (NASDAQ:AAPL) is a leading technology provider in telecommunications, computing, and services. Apple’s iOS operating system is the company’s unique intellectual property and competitive strength. This software drives particularly tight engagement with consumers and enterprises, which is fostering the growing purchase of high margin services like music, apps, and Apple Pay. While iPhone sales were down year-over-year (YoY). services revenues grew 7% YoY which was slightly above analyst estimates. Company earnings were also better-than-anticipated due to lower input costs, such as memory chips and cost control initiatives. Aside from production disruptions, negative sentiment had also weighed on shares as investors questioned how an economic slowdown would affect consumer demand for Apple products in 2023. However, management projected an acceleration in earnings for the fiscal first quarter, where they noted that iPhone and services growth should remain strong, along with encouraging impacts around product mix, lower input costs, and continued cost controls.”
Number of Hedge Fund Holders: 132
It seems hedge funds had foresight on things to come for NVIDIA Corporation (NASDAQ:NVDA) as they upped their bets on the stock in the first quarter. NVIDIA Corporation (NASDAQ:NVDA) shares recently posted unprecedented gains and the company flirted with $1 trillion valuation after a spectacular revenue guidance fueled by AI-related demand. Applications like ChatGPT need huge processing power, and NVIDIA Corporation (NASDAQ:NVDA) is best-positioned to provide chips to power such AI applications.
A total of 136 hedge funds tracked by Insider Monkey reported owning stakes in NVIDIA Corporation (NASDAQ:NVDA) at the end of the March quarter, up from 117 hedge funds in the previous quarter. The biggest stakeholder of NVIDIA Corporation (NASDAQ:NVDA) is GQG Partners of billionaire Rajiv Jain which owns a $2.3 billion stake in the company.
Alger Spectra Fund made the following comment about NVIDIA Corporation (NASDAQ:NVDA) in its Q1 2023 investor letter:
“NVIDIA Corporation (NASDAQ:NVDA) is a leading supplier of graphics processing units (GPUs) for a variety of end markets, such as gaming, PCs, data centers, virtual reality and high-performance computing. The company is leading in most secular growth categories in computing, and especially artificial intelligence and super-computing parallel processing techniques for solving complex computational problems. Simply put. Nvidia’s computational power is a critical enabler of Al and therefore critical to Al adoption, in our view. As such, we believe Nvidia is a long-term high unit volume growth opportunity. During the period, NVIDIA reported fiscal fourth-quarter results that met expectations, as the company navigated. through an inventory correction associated with the broad macroeconomic slowdown. Moreover, management gave fiscal year earnings guidance that was better than analyst estimates. noting strong year-over-year growth in gaming and data centers. Management’s constructive assessment of 2023 prospects. coupled with the rapid rollout and adoption of generative Al offerings, led to positive share price performance.”
Number of Hedge Fund Holders: 136
salesforce.com, inc. (NYSE:CRM) shares have gained about 55% year to date through May 26. It ranks 8th in our list of the best blue chip stocks to buy according to hedge funds. Earlier this month salesforce.com, inc. (NYSE:CRM) shares jumped to their 52-week high. Interestingly, there was no special news causing this rally. According to Yahoo Finance, salesforce.com, inc. (NYSE:CRM)’s 12-month average analyst price target is $226. salesforce.com, inc. (NYSE:CRM) was trading at around $209.9 as of May 26.
A total of 136 hedge funds tracked by Insider monkey had stakes in salesforce.com, inc. (NYSE:CRM) as of the end of the first quarter of 2023.
Vulcan Value Partners made the following comment about Salesforce, Inc. (NYSE:CRM) in its Q1 2023 investor letter:
Salesforce, Inc. (NYSE:CRM) was a material contributor during the quarter. The company has taken numerous positive steps to increase profitability more quickly than expected. Salesforce also improved its corporate governance by recommending three new board members. The company is focused on improving margins, deemphasizing acquisitions, and has expanded its stock buyback plan from $10 billion to $20 billion. We believe Salesforce can pursue these opportunities while continuing to increase its competitive position."
Number of Hedge Fund Holders: 138
Payments giant Mastercard Incorporated (NYSE:MA) in April posted strong Q1 results. Adjusted EPS in the quarter came in at $2.80, beating estimates by $0.09. Revenue in the period jumped about 9.6% year over year to $5.7 billion, beating estimates by $60 million.
Reuters recently reported that Mastercard Incorporated (NYSE:MA) is looking to expand its crypto-linked payment cards program.
Charles Akre’s Akre Capital Management owns a $2.1 billion stake in Mastercard Incorporated (NYSE:MA) as of the end of the first quarter of 2023.
Polen Global Growth Strategy made the following comment about Mastercard Incorporated (NYSE:MA) in its Q1 2023 investor letter:
“We trimmed Mastercard Incorporated (NYSE:MA) and Visa to equal weights of the Portfolio. Mastercard and Visa operate as a duopoly in a large and growing market. Over the last 50 years, global personal consumer expenditures (PCE) has grown 7-9% annualized. We expect 4-5% long-term PCE growth going forward. Additionally, the shift from cash to credit continues unabated, with a total credit penetration of only approximately 50% globally.3 This shift provides Visa and Mastercard with another ~4-6% of growth. When combined with PCE, this gives both companies high-single-digit to low-double-digit revenue growth opportunities. This growth estimate is before accounting for growth amplifiers like the acceleration of e-commerce, the shift from offline to online, and additional services. Both companies enjoy extremely strong network effects that provide strong competitive advantages.
Number of Hedge Fund Holders: 144
Uber Technologies, Inc. (NYSE:UBER) recently posted strong earnings for the most recent quarter, beating estimates for both earnings and revenue. After the earnings report Susquehanna's Syam Patil gave bullish comments for the stock, impressed by its quarterly results and guidance. The analyst said Uber Technologies, Inc. (NYSE:UBER) is seeing “continued solid top-line traction while demonstrating discipline on the cost side.”
BTIG also reiterated its Buy rating on Uber Technologies, Inc. (NYSE:UBER) after the quarterly results.
Hedge fund sentiment around Uber Technologies, Inc. (NYSE:UBER) jumped in the first quarter. Insider Monkey’s database shows that 144 hedge funds had stakes in the company as of the end of March, up from 135 funds in the previous quarter.
RiverPark Large Growth Fund made the following comment about Uber Technologies, Inc. (NYSE:UBER) in its Q1 2023 investor letter:
“Uber Technologies, Inc. (NYSE:UBER): Uber was a top contributor in the quarter following better-than-expected 4Q results and 1Q guidance. Gross Bookings grew 19% year over year to $31 billion, driven by 31% Mobility Gross Bookings growth and 6% Delivery Growth Bookings growth. 4Q Adjusted EBITDA of $665 million, up $579 million year over year, significantly beating management’s $600-$630 million guidance. Management guided to continuing growth in 1Q for Gross Bookings (20%- 24% growth) and Adjusted EBITDA (of $660-$700 million).
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Disclosure: None. 15 Best Blue Chip Stocks To Buy According to Hedge Funds is originally published on Insider Monkey.
