Investing in hedge funds is not something the average investor can do. Rules are in place to ensure these investment vehicles are the playground only for the rich. Small investors need not apply.
But you can still invest alongside the so-called “smart money.” Every three months investment managers have to file a Form 13F with the Securities & Exchange Commission. They detail the stocks they have bought and sold over the previous quarter. Scouring these reports gives you an idea of where billionaires are putting their money to work.
While you might not get the same price for the hedge fund stock picks, that can work to your advantage. No investor, not even Warren Buffett, regularly nails the exact bottom for a stock. By buying in later than the smart money can often get you better prices. Of course, a stock can runaway after it’s purchased, too. So let’s see where the three latest big hedge fund stock picks below sit.
Broadcom (AVGO)
Three of the most influential names on Wall Street were piling into Broadcom (NASDAQ:AVGO). The vast majority of first quarter 13F’s haven’t been filed yet, but in the fourth quarter, the smart money bought over $16 billion worth of the second-largest artificial intelligence (AI) chipmaker behind Nvidia (NASDAQ:NVDA). Of that amount, Blackrock (NYSE:BLK), State Street (NYSE:STT) and Vanguard purchased $8 billion, or half the total.
They haven’t done bad, as Broadcom stock is up 16% in 2024 and some 45% over the last six months (hedge funds could have acquired their stock anytime in Q4). Still, don’t feel you’ve missed the boat on the AI chip stock.
Although Broadcom is best known for the semiconductors it makes for mobile handsets, the chipmaker pivoted to data center infrastructure and its custom accelerators are in high demand. Broadcom reported first-quarter AI revenue surged 300% to $2.3 billion. It now expects AI will account for 35% of 2024 total revenue, or $10 billion. That’s up from its previous forecast of $8 billion. As data centers are a major growth market for the foreseeable future, there is still plenty of time to buy into AVGO stock.
Uber Technologies (UBER)
Ride-share leader Uber Technologies (NYSE:UBER) was another target of the hedge fund triumvirate. Of the $10 billion worth of UBER stock purchased in Q4, Blackrock, State Street and Vanguard were responsible for buying 57% of it, or $6.2 billion.
Although Uber Technologies stock took a hit yesterday after reporting earnings and losing 6% of its value for the day, shares are up 37% over the last six months. Although CFO Prashanth Mahendra-Rajah says Uber’s “multi-year growth framework is on track,” the market was disappointed with gross bookings which fell short of expectations. Still, the ride-share specialist expects to generate between $38.75 billion and $40.25 billion in gross bookings next quarter. That is an 18% to 23% year-over-year increase, suggesting this quarter was a one-off.
There is good reason to believe Uber Technologies’ stock will continue on its growth trajectory. The ride-share leader is investing heavily in autonomous vehicles. The goal is to eventually squeeze out its human drivers so it no longer has to share a fare with them. While CEO Dara Khosrowshahi noted driver earnings are “continuing to grow faster than our topline,” being able to keep all the money to itself will boost both revenue and profits. That is still well into the future but provides a growth target for Uber to aim for.
Newmont (NEM)
With inflation refusing to go away, it is not surprising to see gold miner Newmont (NYSE:NEM) on the radar of hedge funds. Over $5.1 billion was invested in Newmont stock in the fourth quarter, and Blackrock and Vanguard were big buyers again. Van Eck Associates was the third major private equity firm buying last quarter. Together, they purchased more than 61% of the total.
Newmont, though, has had a rocky ride. Shares are essentially unchanged in 2024 and up just 10% over the past six months. Considering an ounce of gold is up 18% in that time frame and this is one of those situations where retail investors can get just as good of a deal as the smart money, if not better.
Newmont is certainly benefiting from the higher prices. First-quarter adjusted EBITDA of $1.7 billion was 71% higher as year-ago sales volumes rose following its acquisition of Newcrest last November. It’s only going to get better as the year progresses.
The gold miner should see sales volumes continue trekking higher as its Pennasquito, Ahafo and Pueblo Viejo mines increase production after numerous setbacks last year. Newmont should be able to overcome its higher unit costs if it keeps reporting solid results.
On the date of publication, Rich Duprey 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.
