This article looks at the 10 most owned stocks by hedge funds right now and discusses the likely impact of interest rate cuts and the upcoming presidential elections on the stock market.
Wall Street stocks surged this month after the Federal Reserve released minutes of its September meeting, which resulted in the first interest rate cuts in over four years. The details disclosed a ‘substantial majority’ of central bankers backing the 0.5 percentage-point cut, raising optimism among investors for further cuts ahead.
The broader market hit record highs on October 11, driven by several financial stocks reporting stronger-than-expected results during the recently concluded quarter. Another factor encouraging investors has been the downturn in US inflation, which fell to 2.4% in September and is inching toward the Federal Reserve’s goal of a two percent annual rate. This has raised hopes of a quarter-point cut in the central bank’s next meeting in November.
However, some analysts warn against diving into stocks after interest rate cuts, citing uncertainty around the upcoming presidential elections. Liz Young Thomas, the head of investment strategy at SoFi, while talking to Business Insider in early September discussed historic patterns in US markets towards the end of the third quarter and the beginning of the fourth.
She noted how the market performs well between June and August due to thinner volumes when traders are on vacation, while volatility picks up with an uptick in activity after they return to their desks in September. However, during the election year, this volatility peaks around mid-October, instead of September, according to Young Thomas.
Fundstrat Global Advisors’ co-founder, Tom Lee, has also cautioned investors against election-related uncertainty. Here is what he stated in an interview with CNBC late last month:
This Fed cut cycle I think is setting the stage for markets to be really strong over the next one month or next three months. But, what the stocks do between now and let’s say election day, I think is still a lot of uncertainty. And that’s the reason why I’m a little hesitant for investors to dive in.
Earlier that month in the weeks leading to the interest rate cuts, Lee, who is generally bullish on the stock market, forecasted a 7-10% dip between September and October amid nervousness around the presidential elections. However, Lee urged investors to ‘buy the dip’, indicating that he sees the likely fall as an opportunity to buy stocks while they trade for a lower value.
Adam Turnquist from LPL Financial also anticipates seasonal volatility in the weeks ahead but reiterated what Lee did, that the dip presents an opportunity to buy when the share is trading low and earn high returns when the market stabilizes. Turnquist advises investors not to readjust their existing portfolios because seasonal volatility has short-term effects and is difficult to forecast.
With that said, let’s now shift focus to hedge fund sentiment on the stock market and discuss some of the most widely held stocks by hedge funds.
An overhead view of a bustling stock exchange, with brokers and traders exchanging stocks.
Methodology
We scanned Insider Monkey’s database of 912 hedge funds for the second quarter of 2024 and picked the top 10 companies with the highest number of hedge funds having stakes in them. We ranked them in ascending order of hedge fund holders in each company.
Why are we interested in the stocks that hedge funds pile into? The reason is simple: our research has shown that we can outperform the market by imitating the top stock picks of the best hedge funds. Our quarterly newsletter’s strategy selects 14 small-cap and large-cap stocks every quarter and has returned 275% since May 2014, beating its benchmark by 150 percentage points (see more details here).
10 Most Owned Stocks by Hedge Funds Right Now:
10. Mastercard Incorporated (NYSE:MA)
Number of Hedge Fund Holders: 142
Mastercard Incorporated (NYSE:MA) is an American payment card services company headquartered in Purchase, New York. It provides financial services to individual consumers, merchants, small and large businesses, and governments by facilitating electronic funds transfers.
During the second quarter, the company delivered strong results with net revenues growing 13% to $6.96 billion. Adjusted net income stood at $3.3 billion, expanding 24% from last year, resulting in an EPS of $3.59 which comfortably beat estimates of $3.51 per share. CEO, Michael Miebach, credited the strong performance to healthy consumer spending and cross-border volume growth.
Miebach said that the decline in inflation rates, wage growth, and a solid labor market drove increased consumer spending during the quarter. While price levels are still elevated for various key essentials, many central banks have started to ease their policies amid a reduction in interest rates. Cross-border volume climbed 17% which was attributed to an increase in travel demand.
According to the United Nations, international tourism is on track to reach pre-pandemic levels this year, which bodes well for Mastercard Incorporated (NYSE:MA)’s future outlook. The company also signed several new travel partnerships in Q2. These included a co-brand agreement with Ethiopian Airlines, the largest airline in Africa, and multi-year contracts with Expedia and Wells Fargo to launch two new co-brand cards with a range of unique travel benefits.
Switched transactions on Mastercard’s network increased 11% year-over-year in Q2, compared to 12% in Q1, reflecting some deceleration in growth. Despite that, consumer spending remains on solid ground and is on track for growth as international travel continues to rise. As a result, Wall Street analysts are bullish on the stock and have a consensus on its Buy rating. Hedge fund sentiment also remains strong. According to Insider Monkey’s database for Q2 2024, 142 hedge funds had investments in Mastercard, making it one of the most owned stocks by hedge funds right now.
9. Uber Technologies, Inc. (NYSE:UBER)
Number of Hedge Fund Holders: 145
Uber Technologies, Inc. (NYSE:UBER) is an American transportation company that provides ride-hailing services, food delivery, courier services, and freight facilities. According to Insider Monkey, it is one of the most owned stocks by hedge funds right now, with 145 hedge funds having investments in the company as of the second quarter of 2024.
The recently concluded Q2 was another profitable quarter for the company, during which it registered a 21% increase in gross bookings, 14% growth in audience, and 6% expansion in frequency. This helped UBER beat earnings estimates, as it logged an EPS of $0.47 against expectations of $0.31. The company’s revenue also soared 16% to $10.7 billion from $9.23 billion a year ago.
Mobility gross bookings surged 23% during the quarter to a total of $20.6 billion, while delivery gross bookings jumped 16% compared to the same period in 2023 to reach $18.1 billion. This significant growth in Q2 indicated strong consumer demand for mobility services as the economy gradually improves. For the third quarter, Uber Technologies, Inc. (NYSE:UBER) anticipates booking revenue to range between $40.25 billion and $41.75 billion.
The company has also seen its profitability and cash flow improve due to effective cost management and operations efficiency. One example of that is that it has reduced its spending on incentives and promotions, and instead adopted a more sustainable business model to drive sales. In Q2, UBER’s operational income spiked to $796 million, up from $326 million during the same period in 2023.
While the forecasted EBITDA of $1.58 billion to $1.68 billion in Q3 is below expectations, analysts believe this is due to foreign exchange rates and has little to do with a decline in demand. The overall sentiment around the stock is bullish, with Street analysts having a consensus on UBER’s Strong Buy rating.
Another critical factor fueling investor confidence is its adoption of autonomous vehicles (AV) technology. In September this year, UBER announced an expansion of its ongoing partnership with Waymo to make self-driving cars available to users via UBER. As part of the agreement, in early 2025, autonomous vehicles will be available for consumers to book through the UBER app in Austin and Atlanta. The company is also engaging other major players in the self-driving industry and expects AV to generate substantial revenue over the next 5-10 years.
8. Taiwan Semiconductor Manufacturing Company Limited (NYSE:TSM)
Number of Hedge Fund Holders: 156
Taiwan Semiconductor Manufacturing Company Limited (NYSE:TSM) is a semiconductor design and manufacturing foundry based at the Hsin-Chu Science Park in Taiwan. According to a report on CNN, the company produces around 90% of the world’s super-advanced semiconductor chips used to power electronic devices such as smartphones, servers, and laptops. These chips are also used to run most artificial intelligence applications.
The company reported robust results during the second quarter of 2024, with a sequential revenue increase of 10.3% in U.S. dollars to reach $20.82 billion. This was also 32.8% higher year-over-year. Operating margin for the quarter was recorded at 42.5%. The net profit margin stood at 36.8%, helping the company log an EPS of $1.48 which beat analysts’ expectations of $1.37 per share. TSMC attributed the solid performance in Q2 to strong demand for its 3-nanometer and 5-nanometer technologies.
TSMC ended the quarter with $63 billion in cash and marketable securities, after generating over $11.5 billion in cash from operations. The company also reduced its accounts receivable turnover from 31 days to 28 days, reflecting its sound financial position. For Q3, Taiwan Semiconductor Manufacturing Company Limited (NYSE:TSM) forecasts revenue to be in the range of $22.4 billion and $23.2 billion, which will represent a 32% year-over-year and 9.5% sequential increase. Operating margin is expected between 42.5% and 44.5%.
These impressive results, coupled with announcements from various large companies to expand their investments in artificial intelligence have led to a bullish sentiment around the stock. Parnassus Growth Equity Fund stated the following regarding TSMC in its Q2 2024 investor letter:
Taiwan Semiconductor Manufacturing Company Limited’s (NYSE:TSM) leading position in AI chip production continued to boost investor sentiment on the stock. During the quarter, announcements by several large technology companies to expand their AI investments signaled insatiable demand for TSMC’s chips and contributed to the stock’s rise.
Looking ahead, the chip giant expects 2024 to be a year of high growth for the company. During the earnings call, Chairman and CEO, Dr. C.C. Wei said that the teams were working hard to enhance capacity to support customers. He also did not rule out the possibility of converting N5 technology to N3 to meet strong demand. Wei also added that the development of 2-nanometer technology was on track to enter full-volume production in 2025.
Considering these factors, most Wall Street analysts have maintained TSMC’s Strong Buy rating and expect a share price appreciation of around 8%. TSM is also one of the most owned stocks by hedge funds right now. According to Insider Monkey, 156 hedge funds had investments in the company, as of Q2 2024. This was up from 135 at the end of Q1, reflecting positive hedge fund sentiment.
7. Visa Inc. (NYSE:V)
Number of Hedge Fund Holders: 163
Visa Inc. (NYSE:V) is a payment technology company that facilitates electronic transactions worldwide through its VisaNet network. It is one of the most owned stocks by hedge funds right now. According to Insider Monkey, 163 hedge funds had a stake in the company, as of Q2 2024.
On July 24, the company announced its results for the third quarter of FY 2024. Net revenue surged 10% from last year to reach $8.9 billion, driven by a 7% increase in overall payment volume during the quarter. Volume grew 5% in the United States, while 10% in international markets. Visa’s EPS also expanded 12% and was recorded at $2.42, which was in line with expectations. The company has reaffirmed its full-year outlook and expects growth in the low double-digits for Q4.
During the quarter, Visa Inc. (NYSE:V) signed and renewed multiple strategic partnerships with its clients, such as Lloyds Banking Group, NatWest, Raiffeisen Bank International AG, Wells Fargo, and Tata Digital. These partnerships are not only aimed at enhancing value for the clients but will also aid in maintaining Visa’s high transaction volumes.
The company is also making strides in artificial intelligence. According to a report in Sky News last month, Visa signed a deal – believed to be valued at £700 million – to acquire software company Featurespace, which develops AI payments protection technology to prevent and mitigate financial crimes. This acquisition is likely to further bolster Visa Inc. (NYSE:V)’s reputation as a reliable financial services provider.
It is also working on enhancing its service offerings by venturing into blockchain. On October 3, Visa Inc. (NYSE:V) introduced the Visa Tokenized Asset Platform (VTAP), a new product that will help banks in issuing fiat-backed tokens on blockchain networks. Live pilots of the platform will commence in 2025. Through VTAP, Visa hopes to integrate blockchain technology into incumbent financial infrastructures, with minimal technical integration via APIs.
Considering these factors, the stock’s future trajectory looks promising. Wall Street analysts have a consensus on Visa’s Buy rating and expect an 11% appreciation in its share price.
6. NVIDIA Corporation (NASDAQ:NVDA)
Number of Hedge Fund Holders: 179
NVIDIA Corporation (NASDAQ:NVDA)’s share price has surged by over 2000% over the last five years, driven by robust demand for graphics processing units (GPU) and AI models. It is the go-to company for firms looking for GPUs and semiconductors as they increase spending on artificial intelligence, which has been a significant catalyst behind the company’s growth.
The software and fabless company had another strong quarter in Q2 2024, with revenues soaring 122% from last year to $30 billion. Net income for the quarter stood at $16.6 billion, which enabled NVIDIA to beat earnings forecasts as it posted an EPS of $0.68, against projections of $0.645. The company attributed these solid results in Q2 to increased demand for data center chips.
NVIDIA anticipates a revenue of $32.5 billion in Q3, with gross margin in the range of 74.4% and 75%. It also expects a strong performance from its Blackwell and Hopper Architecture products during the back half of 2024. Wall Street analysts have a consensus on the stock’s Strong Buy rating and project an upside potential of over 8% in NVIDIA’s share price. However, if growth fails to meet forecasts, that could result in a downturn in the share’s value.
Most investors remain bullish on the stock. It is also one of the most owned stocks by hedge funds right now. According to Insider Monkey’s database for Q2 2024, 179 hedge funds had investments in the company. Here is what Ithaka US Growth Strategy stated about NVIDIA Corporation (NASDAQ:NVDA) in its Q2 2024 investor letter:
NVIDIA Corporation (NASDAQ:NVDA) is the market leader in visual computing through the production of high-performance graphics processing units (GPUs). The company targets four large and growing markets: Gaming, Professional Visualization, Data Center, and Automotive. NVIDIA’s products have the potential to lead and disrupt some of the most exciting areas of computing, including data center acceleration, artificial intelligence (AI), machine learning, and autonomous driving. The reason for the stock’s appreciation in the quarter was twofold: First, the stock benefited from tremendous excitement surrounding the further development of generative AI and the likelihood this would necessitate the purchase of a large number of Nvidia’s products far into the future; Second, Nvidia posted another strong beat and-raise quarter, where the company upped its F2Q25 revenue guidance above Street estimates, showcasing its dominant position in the buildout of today’s accelerated computing infrastructure.
5. Apple Inc. (NASDAQ:AAPL)
Number of Hedge Fund Holders: 184
Apple Inc. (NASDAQ:AAPL) is a leading American technology company known for its consumer electronics, software, and other related products. According to Insider Monkey’s database for Q2 2024, it is one of the most owned stocks by hedge funds right now, with 184 hedge funds having investments in the company.
On August 1, Apple announced strong third-quarter results, generating a record revenue of $85.8 billion. This was a 5% growth from last year. Revenue from products grew 2% year-over-year to reach $61.6 billion, driven by the momentum gained from the launch of iPad Pro and iPad Air. Services revenue climbed 14% to a record-high $24.2 billion. Apple’s gross margin was reported at 46.3%. EPS for the quarter stood at $1.40, beating analysts’ expectations of $1.35 per share.
A significant chunk of Apple Inc. (NASDAQ:AAPL)’s overall revenue during the quarter came from iPhone sales, which totaled $39.3 billion. However, the figure was down 1% year-over-year, due to a 6.5% drop in sales in Greater China, where Apple continues to face fierce competition from local manufacturers such as Huawei. This has led to some concern among investors around the stock.
Another recent event that set the alarm bells ringing for some investors has been Warren Buffett’s Berkshire Hathaway slashing its stake in Apple by half. The company’s shares dropped 5% after the announcement on August 5, but have since then recovered. Financial experts believe that Buffett’s selling spree was triggered by speculation of an impending increase in the capital gains tax, and not due to Apple’s financial performance.
Despite the cuts, Apple Inc. (NASDAQ:AAPL) continues to be the top stock in the billionaire’s portfolio, accounting for over 30% of the total holdings. You can read more on this in our recent article, Buffett Stock Portfolio: Top 10 Stock Picks for 2024.
Wall Street analysts have a consensus on the stock’s Buy rating, and the integration of artificial intelligence in the newly launched iPhone 16 has renewed investor confidence. Mar Vista Focus strategy stated the following regarding Apple Inc. (NASDAQ:AAPL) in its Q2 2024 investor letter:
Investors were reminded of the strength of the Apple Inc. (NASDAQ:AAPL) ecosystem as management demonstrated how generative AI solutions would be integrated into Apple’s 1.2 billion iPhone installed base. Apple plans to integrate generative AI features into its iOS 18, which will be broadly released in the fall with the iPhone 16. We believe Apple should benefit from generative AI as it will spur a meaningful iPhone upgrade cycle and create new avenues of monetization through its app store and advertising offerings. We believe this will support intrinsic value growth ranging between high-single-digits and low-double-digits over our investment horizon.
iPad sales are also surging, having risen 24% during Q3 to reach $7.2 billion. Mac revenue grew 2% year-over-year to a total of $7 billion. The overall outlook for Apple looks encouraging as we enter the backend of 2024.