Amid the turbulence in tech valuations, a subtle rotation in investment preferences is underway. Hedge funds are divesting from technology stocks at an unprecedented pace, shifting their attention to alternative investment options. While this move isn’t a cause for alarm, it does signal a prudent time to realign portfolios with the current market dynamics.
Citing a report from Reuters, investors have shown an inclination towards investment-grade bonds and cash equivalents recently, as data from EPFR tracked by Bank of America suggests. With the potential for abrupt volatility looming over the tech sector, exploring the stocks that hedge funds are embracing could offer a more stable investment outlook.
Embracing the Energy Behemoth: Exxon Mobil (XOM)
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An emblem of the traditional energy sector, Exxon Mobil (NYSE:XOM) continues to command a formidable position in the investment landscape. Bolstered by the inherent efficiency of hydrocarbons, Exxon Mobil remains a magnet for institutional investors. HedgeFollow data reveals substantial institutional acquisition of XOM shares in Q4 last year, with key contributors including Fisher Asset Management, State Street (NYSE:STT), and BlackRock (NYSE:BLK).
Beyond its industry stalwart status, Exxon Mobil offers an attractive forward dividend yield of 3.36% and a sustainable payout ratio of 41.39%. With institutional investors occupying a significant portion of its shareholder base, XOM imparts a sense of stability in uncertain market conditions.
Market analysts tout Exxon Mobil as a moderate buy, projecting a price target of $125.31. As one of the top picks among stocks favored by hedge funds, its appeal transcends mere market trends.
Financial Innovation Meets Stability: Visa (V)
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Blending technological innovation with financial services expertise, Visa (NYSE:V) marks a domain where cutting-edge solutions dovetail with stability. Although the prevailing debt landscape may introduce elements of risk, Visa stands resilient as a hedge fund favorite, evident from the substantial investments made by major players such as State Street and BlackRock.
Despite modest performance in the past fiscal year, Visa boasts a streak of positive earnings surprises, hinting at underlying strength. Analysts are optimistic about Visa’s prospects, forecasting an EPS of $9.92 against a sales backdrop of $35.85 billion for fiscal 2024. Pairing these estimates with a unanimous strong buy rating underscores Visa’s attractiveness among investors.
The Sanctuary of Healthcare: UnitedHealth Group (UNH)
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Amid the market upheavals, UnitedHealth Group (NYSE:UNH) emerges as a beacon of respite from the tech sector’s tumult. With a multi-faceted approach spanning healthcare services through four distinct segments, UNH offers a sanctuary of stability for investors craving a departure from technology-oriented offerings.
HedgeFollow data reveals a robust acquisition of UNH shares by institutional investors in Q4, with notable engagements from Jennison Associates LLC, State Street, and Qube Research & Technologies. UNH’s consistent performance and diversified service offerings contribute to its appeal among hedge funds.
Exploring the Financial Giants: A Review
The Stalwart: UnitedHealth Group (UNH)
Among the financial leviathans, UnitedHealth Group (NYSE:UNH) reigns supreme. This titan of healthcare boasts a forward yield of 1.52%, coupled with a modest payout ratio of 30.55%. In the volatile seas of fiscal speculation, UnitedHealth stands as a beacon of stability. Analysts predict an epic voyage for UNH, with earnings per share expected to soar to $27.77 by the end of fiscal 2024, sailing on sales exceeding $401 billion.
Last year, the voyage was lucrative as UNH docked with an EPS of $25.12 on revenue reaching $371.62 billion. Experts have hailed it with a resounding call to action, declaring a strong buy and setting a course towards a $591.29 price target.
The Pharma Maven: Eli Lilly (LLY)
In the realm of pharmaceutical prowess, Eli Lilly (NYSE:LLY) is an unyielding force. Crafting intricate solutions for a multitude of maladies, from diabetes to neuropathic pain, Eli Lilly has seen its stock ascend by 30% this year alone, with a remarkable 133% surge over the past 52 weeks.
As the titans engage in investment warfare, Eli Lilly finds itself a battleground for hedge funds, with an influx of $6.54 billion in institutional investments in Q4. Vanguard Group spearheads the charge, securing $579.97 million in shares. Citadel Advisors and Jane Street Group vie for supremacy with investments of $289.11 million and $233.37 million, respectively.
Analysts foresee Eli Lilly charting a prosperous course, with an EPS projection of $11.12 and revenue expected to navigate the $36.84 billion mark this fiscal year. Last year, the company saw per-share profits amounting to $5.62 on sales of $30.32 billion. The consensus echoes a resounding call for action, labeling LLY as a strong buy with a $830.67 price beacon. The lofty target of $1,000 signals a potential 30% upside, akin to discovering a treasure trove.
The Financial Goliath: JPMorgan Chase (JPM)
In the fortress of financial services, JPMorgan Chase (NYSE:JPM) fortifies its position across four distinguished segments. Consumer & Community Banking, Corporate & Investment Bank, Commercial Banking, and Asset & Wealth Management together craft the edifice of prosperity. JPM stock reflects this grandeur, rising by almost 16% since the year commenced and appreciating by a staggering 57% over the past year.
The financial battleground witnesses JPMorgan Chase as a fierce contender in the investment arena. Institutional investors flooded the citadel with $6.37 billion worth of investments in the last quarter of the year. State Street emerges as the valiant leader, acquiring nearly $503 million in shares. Arrowstreet Capital and BlackRock follow suit, pledging $447.8 million and $358.34 million in allegiance, respectively.
Bolstering its appeal, JPM stock boasts a forward dividend yield of 2.34%, buoyed by a sturdy 25.26% payout ratio, reminiscent of a secure mooring for investor ships in tumultuous seas. The analysts’ decree settles on a consensus of a moderate buy, with a price compass pointing towards $196.50. Yet, the siren song of the high-side estimate beckons at $221, a distant but achievable treasure.
The Industrial Luminary: Veralto (VLTO)
In the industrial sphere, Veralto (NYSE:VLTO) shines as a beacon in pollution and treatment controls. Offering water analytics, treatment technologies, and packaging innovations worldwide, Veralto navigates through the market currents. The stock of VLTO reflects this resilience, gaining 11% in value since the year dawned and soaring nearly 12% over the past 52 weeks.
A tapestry of intrigue unfolds around Veralto, as investors and analysts alike take heed of this industrial luminary.
As the financial kingdoms engage in battles for supremacy, these stalwarts of industry and healthcare heed the call for investors far and wide, beckoning them to join the epic voyage towards wealth and prosperity.
The Golden Descent: Two Diverging Paths Among Institutional Favorites
AllianceBernstein (AB)
As investors navigate the tumultuous waters of the stock market, a lesser-traveled path beckons with AllianceBernstein (NYSE:AB) at the forefront. In the final quarter of 2023, institutional inflows cascaded to a staggering $6.1 billion, with Vanguard Group leading the charge, scooping up $2.16 billion worth of shares. Not to be outdone, State Street and AllianceBerstein followed suit, claiming $730.24 million and $382.16 million, respectively.
Looking forward, analysts anticipate AllianceBernstein to land at a commendable EPS of $3.29 on revenue of $5.14 billion for the current fiscal year. In stark juxtaposition to 2023’s performance, the company previously boasted an EPS of $3.19 with sales amounting to $5.02 billion.
Covered by a veil of optimism, experts dub AllianceBernstein as a moderate buy, with a tantalizing average price target of $92.43 awaiting those who dare to tread this path.
Newmont (NEM)
Across the sun-kissed plains of investment opportunities, the glint of gold reflects off the Newmont (NYSE:NEM) logo, enticing hedge funds with a unique allure. Nestled within the metals and mining industry, Newmont’s primary focus lies in the cultivation and exploration of gold, alongside a foray into copper, silver, zinc, and lead. Its operations span across the North American terrain, reaching far-flung corners such as Argentina and Australia.
Despite a tumultuous journey, witnessing a 16% erosion in equity value since the year’s dawn, Newmont remains a beacon of interest, drawing in institutional investors to showcase a bold vision. In the last quarter, a whopping $5.18 billion in institutional inflows breathed new life into NEM stock. Vanguard spearheaded the acquisitions, clutching shares worth $1.42 billion, closely tailed by BlackRock at $1.03 billion, and Van Eck Associates at $731.09 million.
Attractive as it may seem, Newmont offers a forward yield of 2.92%, albeit perched atop a towering payout ratio of 180.33%. Analysts foresee EPS of $2.60 alongside sales of $21.86 billion for 2024, marking a significant uptick from the previous year’s performance which boasted an EPS of $2.19 on sales amounting to $16.03 billion.
Analysts don the mantle of a moderate buy for Newmont, projecting an average price target of $43.32, hinting at an enticing 25% upside potential for intrepid investors.
On the date of publication, Josh Enomoto did not have (either directly or indirectly) any positions in the securities mentioned in this article. The opinions expressed in this article are those of the writer, subject to the InvestorPlace.com Publishing Guidelines.
