With another 13F filing season out of the way, investors may wish to check out the names that the big money has been scooping up in recent months. In the first quarter, there was a ton of action. And while the biggest takeaway is that the smart money is hedging their bets while staying cautious in the face of tariff risks and macro unknowns, I do find that many aren’t shying away from scooping up the stocks on their radar that still appear cheap.
In this piece, we’ll look at a trio of hedge fund favorites that are actually close to their 52-week lows at the time of writing. And though they’re not necessarily the most popular names among the Main Street crowd, I do think that they should be compelling to value-conscious investors who’ve found that stocks, as a whole, have gotten a little bit expensive following the explosive springtime April-May rally.
Kraft Heinz
First up, we have condiments juggernaut Kraft Heinz (NASDAQ:KHC | KHC Price Prediction), which has been a perennial laggard for such a long time now. Undoubtedly, perhaps Kraft Heinz is best remembered as one of the Oracle of Omaha’s very rare misses. And though the stock stands out as a deep value play, with shares trading at just 12.1 times trailing price-to-earnings (P/E) to go with a 5.96% dividend yield, I wouldn’t expect anything big from the stock as it seems to lack the drivers to power it out of its latest descent.
At the time of this writing, shares are down 23% over the past year. And the negative momentum could accelerate as the firm stays weighed down by debt while facing stalled growth rates. Indeed, some speculate that Berkshire Hathaway (NYSE:BRK-B) may finally consider throwing in the towel. Personally, I think it’s too late in the game to sell shares, especially given the recent comeback potential if the firm’s $3 billion U.S. manufacturing upgrades were to go right.
In any case, Berkshire stood pat on its position in the first quarter while big-league value investor Prem Watsa added to his Kraft Heinz stake, which now accounts for around 5.5% of the Fairfax portfolio, in the first quarter. Buying KHC stock at these depths won’t be easy or pain-free, but I do think there’s real value to be had in the name.
Chevron
Up next, we have big-oil juggernaut Chevron (NYSE:CVX), which is around 4% higher than its 52-week (and multi-year) lows of around $133 and change.
A number of legendary money managers, including Buffett and Berkshire, are still holding onto their shares. And though there hasn’t been much new hedge fund money pouring into the name in the first quarter, I still view ample value to be had at 15.5 times trailing P/E. The nearly 5% dividend yield is also enticing for the income-oriented investors out there.
Though a recovery may not be swift, some pundits view the big energy firm as having the levers (think acquisitions) to power higher. In any case, Chevron has hiked its dividend for nearly four decades. And it’s not about to stop the increases anytime soon. All considered, dividend growth investors should probably stick by the name.
Thermo Fisher
Finally, we have Thermo Fisher Scientific (NYSE:TMO), which is now down around 40% from all-time highs. Though the analytical instrument maker has faced pressure amid stalling spending in the biotech scene and weakness in China, I’m inclined to view the name as way too cheap to ignore, even if industry budgets stay a bit tigher for longer.
At the end of the day, the tariff headwinds are nothing that management can’t overcome. And at just shy of 18 times forward P/E, I think there’s an opportunity to snag the hedge fund favorite at a good discount.
In the first quarter, a number of smart money managers added to their position in the oversold name. While it’s not the most notable hedge fund favorite, it is one of the most hard-hit in recent months. My guess is it has room to catch up as the market looks to make a run to its prior highs.
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