Investing

5 Large Cap Growth Stocks Top Fund Managers Own and Love

Lee Jackson

Published: April 20, 2018 9:55 am

Last Updated: January 12, 2020 12:43 am

To say that hedge fund and mutual fund managers tend to follow the herd is an incredible understatement, and always has been. While publicly they sometimes seem reluctant to discuss their holdings, especially stocks they are short sellers of, the reality is managers tend to talk among themselves as they run in the same circles, and often the discussions are centered around their portfolios and what is in them.

In a new Jefferies report, superb equity strategist Steven DeSanctis breaks down the top holdings in not only all three market capitalization groups — large cap, mid-cap and small cap — but he also breaks down the three into core, growth and value categories.

Here are the top five holdings of large-cap growth managers.

Facebook

The huge social media leader has been volatile recently after the disclosure of user data being compromised. Facebook Inc. (NASDAQ: FB) operates the largest social network, with over 2.0 billion monthly active users and over 1.4 billion daily active users. The company generates revenue from advertising and from payments, with over 95% of revenue from advertising. It generates close to 50% of revenues in the United States and Canada and is expanding rapidly in international markets.

Its solutions also include Instagram, a mobile application that enables people to take photos or videos, customize them with filter effects, and share them with friends and followers in a photo feed or send them directly to friends; Messenger, a messaging application for mobile and web on various platforms and devices, which enable people to reach others instantly, as well as enable businesses to engage with customers; and WhatsApp Messenger, a mobile messaging application.

A stunning 88.7% of managers have the social media giant in their portfolios, and despite the recent issues, there is no reason to think many will be selling all their shares.

The shares were trading early Friday at $167.60, in a 52-week trading range of $142.27 to $195.32. The Wall Street consensus price target for the stock is $217.85.

Amazon

This absolute leader in online retail and dominant player in cloud storage business remains the top pick at Stifel. Amazon.com Inc. (NASDAQ: AMZN) serves consumers through retail websites that primarily include merchandise and content purchased for resale from vendors and those offered by third-party sellers.

The company serves developers and enterprises through Amazon Web Services (AWS), which provides computing, storage, database, analytics, applications and deployment services that enable virtually various businesses. AWS is also the undisputed leader in the cloud now, and many top analysts see the company expanding and moving up the enterprise information value chain and targeting a larger total addressable market.

Some 82.7% of the managers own shares of this incredible company, which despite some criticism directed at the company by President Trump continues to dominate in many categories.

The posted consensus target price is $1,672.93, and shares traded Friday morning at $1,550.75. The 52-week trading range is $896.29 to $1,617.54

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Microsoft

This top old-school technology stock has posted all-time highs this year and has a massive $138.6 billion sitting on the balance sheet. Microsoft Inc. (NASDAQ: MSFT) continues to find an increasing amount of support from portfolio managers, who have added the software giant to their holdings at an increasingly faster pace all of this year and last.

Numerous Wall Street analysts feel that Microsoft has become a clear number two in the public or hyper-scale cloud infrastructure market with Azure, which is the company’s cloud computing platform offering. Some have flagged Azure as a solid rival to Amazon’s AWS service. Analysts also maintain that Microsoft is discounting Azure for large enterprises, such that Azure may be cheaper than AWS for larger users. The cloud was big in the recent earnings report, which was outstanding.

And 78% of the managers own the software giant, which is quickly gaining traction in the cloud and may be one of the safest bets when it comes to owning technology.

Microsoft shareholders currently receive a 1.75% dividend. The shares recently traded at $95.55, while the 52-week range is $65.14 to $97.24. The consensus price objective was last seen at $105.21.

Visa

This top credit card issuer is becoming a huge leader in digital payments. Visa Inc. (NYSE: V) operates the world’s largest retail electronic payments network. The company provides processing services and payment product platforms, including consumer credit, debit, prepaid and commercial payments, that are offered under Visa and related brands. According to Nilson estimates, the company is the largest global credit network (as measured by volume) and the second largest global debit network.

Visa is not a bank and does not issue cards, extend credit or set rates and fees for consumers. Visa’s innovations, however, enable financial institution customers to offer consumers more choices: pay now with debit, pay ahead of time with prepaid or pay later with credit products.

This is the only company in the top five stocks that managers own that is not in the technology sector. It remains well-liked across Wall Street, as 77.9% of managers have shares of the company.

Visa shareholders receive just a 0.68% dividend. The posted consensus price target is $140.09. The shares were last seen trading at $124.10, and the 52-week trading range is $89.90 to $126.28.

Apple

This technology giant has been hit recently on concerns that the iPhone X is not the huge home run that was expected. Apple Inc. (NASDAQ: AAPL) designs, manufactures and markets consumer electronics and computers, and it has developed its own proprietary iOS and Mac OS X operating systems and related software platform/ecosystem.

Revenues are principally derived from the iPhone line of smartphones, hardware sales of the Macintosh family of notebook and desktop computers, iPad tablets and iPod portable digital music players. The company also realizes revenue from software, peripherals, digital media and services.

It’s no surprise that this technology giant is in the top five, as 77.6% of managers own the stock. One of those managers is the legendary Warren Buffet, who owns a reported 165 million shares.

Apple shareholders are paid a 1.46% dividend. The consensus price target is $193.02, but the stock traded at $168.85. It has a 52-week range of $89.90 to $126.28.

While these top holdings probably should come as no surprise, they make sense as they are huge, dominate much of their specific business lines, are very liquid and look to continue to maintain their growth trajectories for the foreseeable future.