Emulating the moves of hedge fund stock pickers, and some of the most successful hedge funds can produce sizable profits for retail investors. In fact, here are seven of the top institutional stock picks you may want to consider as we near the last few months of 2023.
Top Institutional Stock Picks: GSK (GSK)
At the end of the second quarter, 35 hedge funds had bullish positions in GSK (NYSE:GSK), up from 33 at the end of Q1. Moreover, Ken Fisher, the highly successful, multi-billionaire hedge fund had 13.8 million shares of the name as of June 30.
According to the research firm GlobalData, GSK’s Arexvy, a vaccine for the RSV virus, will generate $2.5 billion in sales for the firm between 2023 and 2029. In addition, in line with my previous predictions, the company’s cancer treatment, Jemperli continues to be approved for new indications. For example, the US FDA approved it as a treatment for a type of primary advanced or recurrent endometrial cancer on July 31. I continue to believe that the drug will be a huge revenue generator for GSK over the longer term. GSK stock has a very low forward price-earnings (P/E) ratio of just 9.5 and a high dividend yield of 3.9%.
At the end of Q2, 63 hedge funds owned shares of medical device maker Medtronic (NYSE:MDT), up from 52 at the end of Q1. Moreover, Ken Fisher’s Fisher Asset Management owned 3.2 million shares of MDT as of June 30.
According to the Appleseed Fund, another hedge fund that owns MDT stock, “Medtronic is the world’s largest device manufacturer, and it holds the number one or number two market share in most of its product segments.” Appleseed added that MDT’s products tend to facilitate “complicated in-patient procedures, which are typically quite profitable.” The fund expects MDT to benefit from the aging population in Western countries “and the growth of improved healthcare in emerging markets.”
Last quarter, MDT’s sales climbed about 5% versus the same period a year earlier while its bottom line rose about 6% year-over-year. The company slightly raised its full-year earnings per share guidance and has a low forward price-earnings ratio of 16.
As of the end of Q2, 91 hedge funds had obtained stakes in Walmart (NYSE:WMT), and institutional investors added 60.68 million of its shares last quarter while unloading just 36.795 million. Among prominent hedge funds, D.E. Shaw increased its stake by 13.9%, while Neuberger Berman increased its ownership of WMT stock by 45.3%.
Last quarter, WMT’s U.S. comparable sales jumped an impressive 6.4% versus the same period a year earlier, and its operating income, excluding certain items, soared 8% year-over-year. WMT raised its 2023 EPS guidance to a range of $6.36 and $6.46 from $6.10 and $6.20.
Thermo Fisher Scientific (TMO)
Thermo Fisher Scientific (NYSE:TMO) sells products to life sciences companies and organizations. As of the end of Q2, 98 hedge funds owned TMO stock, while institutional investors added 21.78 million shares of the name last quarter and sold only 17.93 million units. Among top hedge funds, T. Rowe Prince increased its stake in TMO by 6.2% last quarter, while TCI Fund Management’s stake soared by 280% to 3.17 million shares and Arthur M. Cohen & Associates’ holding jumped 30,904% to 3.12 million shares.
In a letter to its investors, hedge fund Polen Global Growth Strategy said TMO is “well balanced (and) durable, (with) a strong management team at the helm.”
As of the end of Q2, 112 hedge funds were long JPMorgan (NYSE:JPM), up from 100 as of the end of Q1. Last quarter, 1,804 institutions increased their stakes in JPM by 60.6 million shares, while 1,633 institutions lowered their stakes by 58.06 million shares, making it one of the top institutional stock picks. Among prominent hedge funds, Wellington Management raised its stake in JPM by 1.6% to 37.8 million shares, while T. Rowe Price added 1.1% to 33.13 million shares.
According to hedge fund Manole Capital Management, the bank “now has 13% of total US deposits and it manages 21% of America’s credit card spending.” Manole Capital also believes that JPM’s large size is “a competitive advantage” for it. JPM stock has a very low forward price-earnings ratio of just 9.7, and its net income jumped to $14.47 billion last quarter from $8.65 billion during the same period a year earlier.
As of the end of Q2, 132 hedge funds owned Nvidia (NASDAQ:NVDA) stock versus 106 at the end of Q1. In Q2, 1,558 institutions increased their positions in NVDA by 91.575 million shares, while 1,858 institutions lowered their stakes by 76.4 million shares, making it one of the top institutional stock picks.
Among prominent hedge funds, Geode Capital increased its stake by 3% or 1.4 million shares while Wellington Management Group added 2.9 million shares, raising its stake by 39%. Well-respected analyst Dan Ives was very enthusiastic about Nvidia’s recently reported Q2 results, calling its report a “historical moment for the broader tech sector” and saying its “guidance and commentary (were at a) drop the mic level.” Ives also compared NVDA to elite professional athletes.
As of June 30, 136 hedge funds had long positions in Salesforce (NYSE:CRM), way up from 117 as of the end of Q1. Harris Associates had the largest position of any hedge fund, as it owned 7.7 million shares of CRM. Last quarter, 1,120 financial institutions increased their holdings in CRM by 52.3 million shares, while 1,047 of them reduced their stakes by 54.4 million units.
Among prominent hedge funds, Capital World Investors raised its stake by 30% of 4.46 million shares while Nuveen Asset Management raised its holdings by 11.5% or 1.03 million shares. JPMorgan raised its price target on CRM stock to $240 from $230 and stated that the company is “infusing Generative AI capabilities into its clouds.”
On the date of publication, Larry Ramer did not hold (either directly or indirectly) any positions in the securities mentioned in this article. The opinions expressed in this article are those of the writer, subject to the InvestorPlace.com Publishing Guidelines.