Investing

4 Stocks That Both Top Hedge Funds and Mutual Funds Have Loaded Up On

Lee Jackson

Published: August 28, 2019 7:30 am

Last Updated: January 30, 2020 4:52 pm

To say that Wall Street portfolio managers tend to talk among themselves is probably an understatement, as those in the industry tend to mingle professionally and socially. However, since hedge funds and mutual funds often have far different strategies and time horizons, they often have widely different portfolio holdings. So we found it interesting when Goldman Sachs screened various top hedge funds and mutual funds looking for holdings they had in common.

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The Goldman Sachs team found that the 13 “shared favorites” of the top mutual funds and hedge funds are outperforming the S&P 500 this year. In addition, all but one of those stocks that overlap in the firm’s Hedge Fund VIP and Mutual Fund Overweight’s baskets were also shared favorites last quarter.

24/7 Wall St. screened the list looking for stocks that also pay safe dividends. The current market environment is volatile, and dividend-paying leaders make sense in a low interest rate environment.

Comcast

This top media and entertainment conglomerate remains a Wall Street favorite. Comcast Corp. (NASDAQ: CMCSA) is the largest U.S. provider of cable services, with over 22 million basic subscribers. It owns NBCU, which includes the NBC TV Networks, Telemundo, MSNBC, USA, Syfy, Bravo, E!, CNBC and several other cable networks, as well as Universal Films and Universal Theme Parks.

Comcast has invested in technology to build an advanced network that delivers among the fastest broadband speeds and brings customers personalized video, communications and home management offerings. Though, it is also one of the companies with the biggest corporate debt.

With the presidential election cycle starting up next year, this company stands to benefit big time, and a stunning number of the fund managers own the shares. Comcast is also a solid defensive play for nervous investors.

Shareholders receive a 1.93% dividend. The Wall Street consensus price target is $49.26, and shares closed Tuesday’s trading at $43.60.

Delta Air Lines

This company consistently has ranked high with Wall Street, but its stock sold off some recently and is offering a good entry point. Delta Air Lines Inc. (NYSE: DAL) and the regional Delta Connection carriers offer service to 334 destinations in 64 countries on six continents. Headquartered in Atlanta, Delta employs nearly 80,000 employees worldwide and operates a mainline fleet of more than 700 aircraft.

Wall Street analysts have long lauded that Delta has the most extensive hedging policy among the airlines and owns and operates a refinery in addition to a sizable hedging book. The stock outperformed last year, and if bookings and the economy continue to spike up in 2019, many believe that the company’s multiple stands to benefit the most among the major carriers.

Delta investors receive a 2.87% dividend. The consensus price objective is $69.76, and the stock was last seen trading at $56.14.

UnitedHealth

This is a top stock to buy in the rapidly consolidating managed health sector. UnitedHealth Group Inc. (NYSE: UNH) offers the full spectrum of health benefit programs for individuals, employers and Medicare and Medicaid beneficiaries, and contracts directly with more than 850,000 physicians and care professionals and 6,000 hospitals and other care facilities.

The company is considered the most diversified payer, either by product line, geography or customer type. Its operating segments include United Healthcare, OptumRx, OptumInsight, and OptumHealth.

UnitedHealth investors receive a 1.94% dividend. The $269.76 consensus price target is well above the most recent close at $222.93.

Visa

This top credit card issuer is becoming a huge leader in digital pay. 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.

Visa remains very well liked across Wall Street, as a large percentage of portfolio managers own shares of the company. It is also one of the most valuable brands in the world.

Investors receive just a 0.55% dividend. The consensus price objective is $200.50. The stock closed most recently at $178.38.

These top shared favorite 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 trajectory for the foreseeable future.