Hedge fund trades have been made public over the past quarter with the release of 13F forms filed with the SEC. TipRanks tracks hedge fund transactions on more than 5,000 stocks, enabling us to see the stock picks of the best-performing fund managers.
We rank the hedge fund managers by looking at how each hedge fund performed in comparison to other hedge funds and to the S&P 500. Top hedge funds are determined by those that generate the highest return based on their stock portfolio.
The result: We can see where the savviest “smart money” is really going, and then analyze whether the stock makes a compelling investing opportunity using the most recent analyst ratings and reports.
Here are the five stocks that five of the best performing fund managers are bullish on:
Stock Picks: Cerner Corp (CERN)
In the past quarter, Blood upped the fund’s CERN position by 2.74% to a whopping $1.01 billion. Now Cerner makes up about 11.7% of the fund’s total portfolio — a portfolio which boasts a 25% average annualized return over the previous three years.
Five-star Canaccord Genuity analyst Steven Halper reiterated his “buy” rating on the stock with a $77 price target (18% upside potential) only two days ago. He mourns the loss of Cerner founder and CEO Neal Patterson on July 9 and says:
“Regardless of who is named [as the next CEO], we very much expect Cerner to continue to continue its growth strategy, which now stretches well beyond sales of traditional software applications to hospitals.”
The analyst adds, “Cerner shares trade at 17% discount to our DCF-based target price of $77. We believe our estimates are mostly conservative and higher valuation levels are likely.”
Stock Picks: Mastercard (MA)
Founder of the $6 billion Akre Capital Management fund, Chuck Akre is backing credit card giant Mastercard Inc (NYSE:MA). He increased the fund’s MA position by just over 13% to close to $600 million, which is equivalent to about 10% of the total portfolio.
Akre is famous for his “three-legged stool” investment strategy, which refers to stocks with “(1) extraordinary business, (2) talented management and (3) great reinvestment opportunities and histories.” So far, this approach seems to be working, with the fund delivering an impressive 23% average return on a three-year annualized basis.
The Street also has a “strong buy” consensus rating for MA stock, with an average analyst price target of $129.17 (5.25% upside from the current share price). On July 5, top RBC Capital analyst Daniel Perlin called Mastercard a “Top Pick” for the financial sector.
“Mastercard remains one of best ideas in the space given our belief that investors should look to focus on long-term secular-driven stories that provide solid organic growth with opportunities for margin expansion.”
Perlin’s $130 price target comes in just above the average analyst price target.
Stock Picks: Bioverativ (BIVV)
Last quarter, the $2.2 billion HealthCor Management fund initiated a position in Bioverativ Inc (NASDAQ:BIVV) worth $272 million. Since the previous filing date, this position has already gained an impressive 14%.
On July 10, Cowen & Co analyst Eric Schmidt upgraded BIVV to “buy” and ramped up his price target up from just $47 to $80 (29% upside potential). Schmidt is very bullish on Bioverativ’s TNT009 drug, which the FDA has already designated as a breakthrough therapy. He says:
“We believe the recent acquisition of True North and orphan candidate TNT009 for cold agglutinin disease is a game changer that dramatically improves Bioverativ’s pipeline, growth potential, and diversification. We view TNT009 as a highly-innovative, low-risk candidate with >$1.5B in sales potential.”
Stock Picks: Alphabet (GOOGL)
The fund, which now counts GOOGL as one of its five biggest stocks, has delivered a very strong average return of just over 20% on an annualized three-year basis.
Tech giant Alphabet has one of the best Street ratings out of all the stocks covered by TipRanks. In the build-up to Alphabet’s July 24 earnings release date, top Credit Suisse analyst Stephen Ju reiterated his “buy” rating with a $1,150 price target (21% upside potential).
He believes that GOOGL stock has “the best risk reward” with strong YouTube ad spending, and suggests that GOOGL could “receive greater consideration as ‘weapons dealers’ to a retail sector looking to promote not only foot traffic but also their e-commerce operations as well.”
Stock Picks: Baidu (BIDU)
Founder of $6 billion long/short equity hedge fund Eminence Capital, Ricky Sandler, is betting on Chinese web services giant Baidu Inc (ADR) (NASDAQ:BIDU). In the previous quarter, he increased the fund’s Baidu holding by almost 20% to $193 million. And since its earlier filing date, the holding is already up 5.15%.
Interestingly, while the Street has a “moderate buy” consensus rating for BIDU, if we narrow down the list to only the best-performing analysts the consensus shifts to “strong buy.” One of these top analysts is Jefferies’ Karen Chan who has a bullish $208 price target on the stock, which suggests serious upside potential from the current $183 share price.
She is looking for multiple positive catalysts on the stock including the launch of Netflix content in the second half of the year, sequels to popular dramas and an increase in subscription models and revenue.
TipRanks doesn’t just rank hedge fund managers. We also give investors the latest insight into the activity of 4,500 analysts, 5,000 financial bloggers and even 37,000 corporate insiders.