Since the pandemic, retail investors have accounted for a much larger percentage of stock purchases than before that era, but institutional investors still dominate the stock market. Providing evidence of that assertion, in 2021, JPMorgan found that “institutional investors account for around 90% of the daily trading volume on the Russell 3000 index, which is the broadest major U.S. stock index,” Seeking Alpha reported. Consequently, intuitional investors still play a huge role in determining the fate of stocks. So when retail investors are looking for stocks to buy, they should remember that names that institutional investors favor have a much higher chance of succeeding than the stocks with which the “big money” is not very enamored.
As a result, it’s quite valuable to know which stocks institutional investors are rushing to buy. Here are three surging stocks that big money loves.
Stocks to Buy: MGM Resorts (MGM)
MGM (NYSE:MGM) stock is up nearly 30% so far in 2023, and two huge investors with sterling track records have bought its stock.
Most impressively, Barry Diller’s IAC (NASDAQ:IAC) has accumulated a 12% stake in MGM, which owns many casinos in Las Vegas and has launched a joint venture specializing in online sports betting. Diller first became involved with MGM in 2020, when IAC invested almost $1 billion in the casino owner.
Diller, whose net worth is reportedly about $3.9 billion, launched many successful TV shows as a television network executive in the 1980s. Among the highly successful internet companies he built or helped build are IAC, Expedia (NASDAQ:EXPE), and Tinder.
Meanwhile, Michael Burry, who became famous for correctly predicting the financial system crash in 2008 and has recently become well-known as an uber-bear on the stock market, nonetheless bought 100,000 shares of MGM stock last quarter.
According to Nasdaq.com, in recent months, 91 institutions have started new positions in MGM stock, buying 7.14 million shares of the company. Conversely, 64 institutions have dropped MGM, selling 6.1 million shares of the name.
Since bottoming in September, Freeport-McMoRan (NYSE:FCX), which specializes in mining copper, has jumped 58%, closing at $41.79 on Feb. 22.
And not coincidentally, FCX has become very popular with institutional investors during the stock’s rally. Specifically, according to Nasdaq.com, 696 institutional investors have bought 76.35 million shares of the name, while 504 have sold 58 million shares, and 163 have held nearly 1 billion shares.
When it comes to buying shares for the first time, 253 institutions purchased 21.18 million shares. Meanwhile, only 102 organizations liquidated their ownership of FCX completely, selling 9.62 million shares.
Speaking on FCX’s fourth-quarter earnings conference call, held on Jan. 25, FCX’s President, Kathleen Quirk, said, “The facts are that the physical markets for copper have remained tight even during a period of weaker economic data coming out of China, and that’s evidenced by the low levels of available copper inventories throughout the year.”
Quirk added, “At the same time, copper’s importance in the economy continues to grow as a result of the intensity of use in clean energy applications and the global acceleration of electrification.”
I agree that the rapid proliferation of renewable energy and the electrification of transportation should be very positive for copper prices, FCX, and FCX stock.
According to Investor’s Business Daily, Crocs (NASDAQ:CROX) has a Relative Strength score of 98 out of a possible 99. That means that CROX has outperformed nearly all other stocks over the last year. The company has an Accumulation/Distribution grade of B+, showing that many institutions have been buying the shares in the last 13 weeks.
Nasdaq.com’s data is much more impressive, showing that, in recent months, 243 institutions bought 8.23 million shares of CROX, while 172 organizations sold only 4.64 million shares. Meanwhile, 104 institutions purchased its shares for the first time, buying 2.53 million, while only 48 institutions liquidated their positions in CROX completely, unloading 1.07 million shares.
In the last three months, CROX stock has rocketed 30% higher, but its price-earnings ratio is still a reasonable 14.4.
On the date of publication, Larry Ramer held long positions in FCX and MGM. The opinions expressed in this article are those of the writer, subject to the InvestorPlace.com Publishing Guidelines.