Hedge fund trades have just been made public for the last quarter with the release of 13F forms filed with the SEC. TipRanks tracks top hedge fund transactions on more than 5,000 stocks, enabling us to monitor a couple of things when it comes to recent stock picks. Namely …
- See what the best performing fund managers are up to.
- Assess the overall hedge fund sentiment on any particular stock.
It should be noted that fund managers are only required to submit these 13F forms to the SEC 45 days after the end of the last quarter. That means by the time the information on these stock picks is made public, it is no longer necessarily current. Nonetheless, these trades still give a valuable insight into the direction top fund managers believe the market is heading.
Here, I pinpoint five stocks with particularly bullish hedge fund sentiment for Q3 and strong support from the Street. In fact, all the stocks I have selected below boast a ‘Strong Buy’ analyst consensus rating based on the last three months.
Let’s take a closer look now:
Top Hedge Fund Stocks: Incyte Corp (INCY)
We can see that fund managers are not giving up on pharma Incyte Corporation (NASDAQ:INCY). The hedge fund confidence signal on the stock is ‘very positive’ based on 18 hedge fund transactions in Q3. Overall, hedge funds ramped up holdings by over 1 million shares in Q3. For example, big-name fund managers like Arthur Cohen, Andrew Law and Joel Greenblatt all initiated new positions in the stock, while Frank Sands is still the stock’s biggest shareholder with a whopping position worth $883 million.
And it’s not just fund managers who are bullish on INCY. The stock also has a ‘Strong Buy’ analyst consensus rating with five back-to-back buy ratings from top analysts in the last three months. The icing on the cake: with share prices now at $105 down from $138 in August, these analysts are predicting serious upside for INCY of over 49%. Shares in INCY fell rapidly after Gilead Sciences, Inc. (NASDAQ:GILD) snapped up cancer therapy developer Kite Pharma for $11.9 billion instead of Incyte.
Now the mood is feeling bullish again. “With one of the deepest/broadest immune-oncology pipelines in the sector, the added flexibility of an in-house PD-1 inhibitor and a potentially first in class oncology asset with an important value inflecting catalyst in the first half of 2018, we think that INCY represents an attractive opportunity with strategic value. Maintain OW,” said JP Morgan analyst Cory Kasimov at the end of October. He has a $149 price target on the stock, indicating upside potential of well over 40%.
Top Hedge Fund Stocks: Micron Technology (MU)
Fast-growing semiconductor stock Micron Technology, Inc. (NASDAQ:MU) ticks all the boxes. Year-to-date, the stock has exploded by 110% boosted by a world shortage of memory chip solutions. And from the latest quarter trades, the Smart Money appears confident that MU is set for further growth. Hedge funds increased holdings in MU by 6.1 million shares in Q3, giving the stock a ‘very positive’ hedge fund sentiment.
Interestingly, top-rated fund managers are particularly bullish about the stock. Theofanis Kolokotrones, head of the $120 billion PRIMECAP fund, is ranked an impressive #13 out of 202 hedge fund managers on TipRanks. He is the stock’s largest shareholder with over $2.3 billion in MU. We can also see that Q3 newcomers to the stock include big-name fund managers Joel Greenblatt and Ray Dalio.
From a Street perspective, these moves make sense. MU has a ‘Strong Buy’ analyst consensus rating, and an average price target of $51.27 (11% upside). Cyrus Mewawalla of CM Research says: “The big three memory companies — Samsung, SK Hynix and Micron — control over 80% of the global memory chip market at a time of worldwide memory shortage. As a result, their shares have done exceptionally well … We believe this global memory chip shortage is set to continue until the end of 2018, at the least.”
Top Hedge Fund Stocks: Applied Materials (AMAT)
Also riding high on the semiconductor wave is chip gear maker Applied Materials, Inc. (NASDAQ:AMAT). In Q3, hedge funds snapped up 5.9 million more Applied Materials shares. Zero hedge funds exited the stock and only five reduced positions vs 18 that increased holdings. U.K.-based fund manager Egerton’s John Armitage upped his position by 23% to $883 million, making this the fund’s third biggest stock after Comcast Corporation (NASDAQ:CMCSA) and Charter Communications, Inc. (NASDAQ:CHTR).
“Every Year is a Peak Year for Gary’s [CEO Gary Dickerson] AMAT,” according to five-star Credit Suisse’s Farhan Ahmad. He reiterated his buy rating on AMAT on Nov. 17 with a $72 price target (27% upside potential). The move came following the stock’s strong fiscal fourth-quarter results and upbeat guidance. Ahmad pointed out that 2018 (calendar year) appears to be the stock’s sixth straight year of consecutive growth — a sharp contrast from 1997 to 2012.
Overall, AMAT boasts 100% Street support with 14 consecutive buy ratings from analysts in the last three months. And with a $64.50 average price target, analysts are predicting AMAT can climb over 14% over the next 12 months.
Top Hedge Fund Stocks: Expedia Inc (EXPE)
Hedge fund enthusiasm for online travel site Expedia Inc (NASDAQ:EXPE) is as strong as ever. Last quarter, for example, hedge funds ramped up holdings in EXPE by 1.3 million shares. The fund’s largest shareholder, Steve Mandel (Lone Pine Capital) edged up his shareholding by 3% to $670 million, while Brad Gerstner left his position unchanged at $647 million. Note that Gerstner is ranked No. 4 out of 202 hedge funds on TipRanks and he holds Expedia as the Altimeter’s No. 1 stock.
“We continue to favor global OTA [online travel agency] players with scale (EXPE, PCLN) post-earnings and view the recent pullback in these stocks as a buying opportunity,” writes top SunTrust Robinson analyst Naved Khan on Nov. 10. He reiterated his buy rating with a $170 price target suggesting big upside potential of 37%.
“The hit to near-term outlook for both companies is in large part self-inflicted, as they make strategic moves with short-term implications, to position themselves for sustained growth and profitability longer-term in the $1.3T Travel market,” concludes Khan. EXPE has received 14 buy ratings from the Street vs four hold ratings in the last three months. These analysts have an average price target on EXPE of $157.
Top Hedge Fund Stocks: Norwegian Cruise Line Holdings (NCLH)
This Bermudian cruise ship company is a favorite with hedge fund managers who increased holdings by a whopping 2 million shares in the last quarter. New positions include $66 million from Ken Heebner of Capital Growth Management, and $44 million from Donald Chiboucis of Columbus Circle Investors. Based on 16 hedge fund trades in the last quarter, TipRanks concludes that the Smart Money has a ‘very positive’ confidence signal on Norwegian Cruise Line Holdings Ltd (NASDAQ:NCLH) stock.
Top Argus Research analyst John Staszak has just initiated coverage of NCLG with a $68 price target (24% upside potential). He says the stock is attractively valued with a clean balance sheet and strong prospects for earnings growth. NCLH also boasts an expanding fleet with $1 billion allocated for building new ships every year through 2020. And given that NCLH is slightly smaller than its peers, it has more room to increase capacity.
In total, analysts have published five buy ratings vs just one hold rating on this ‘Strong Buy’ stock in the last three months. Meanwhile, NCLH’s average analyst price target of $65.80 translates into big upside of 20% from the current share price.
Which stocks are top 25 hedge fund managers buying? Find out here.
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