It’s hard for retail investors to get picks right. Most investors are limited to limited information that’s already priced in. However, Hedge Funds’ investment research is different. Their research is done with the most recent information, some of which isn’t even available to the press. This gives them a massive advantage.
While hedge funds aren’t required to disclose all holdings, the firm’s long positions in U.S. equities can be seen on the 13F. An investment strategy that is growing in popularity is tracking government officials’ trades and re-empowering them. Traders have seen success with this strategy, but it is difficult to tell the time horizon for these positions.
Knowing a Hedge Fund’s long positions means retail investors can benefit from their long positions. Here are three stocks hedge funds are buying.
Vistra (VST)
Vistra (NYSE:VST) is a Fortune 500 company specializing in retail power and electricity generation. Yahoo! Finance reports seven analysts predicting a 1-year price range on VST between $40 and $139, with an average price target of $109.45. It’s one of the stocks hedge funds are buying.
VST has solid financials. Its Q1 2024 earnings leave much to be desired, reporting -0.24 EPS and $3.05 billion in revenue. While there was a 4.46% revenue surprise to analysts, VST missed earnings by 74.89%. However, financials were poor for the quarter because of efforts to improve operational efficiency after acquiring retail energy supplier Energy Harbor. Interestingly, VST seems to be below fair value right now. The company’s EV/Sales ratio is 3.29, below the sector median.
Likewise, hedge funds have been taking notice of this value stock as well. Mather Group bought $26,000 in shares of VST in Q1 2024. With a $23.93 billion market cap, hedge fund Raymond James (NYSE:RJF) raised its position by 5.2% to 29,726 shares in Q4 2024. Surprisingly, a staggering 90.88% of shares are from institutional investors and hedge funds. An acquisition, alongside strong institutional faith in this stock, means investors should consider VST.
Littelfuse (LFUS)
Littelfuse (NASDAQ:LFUS) is an electronics manufacturer that makes circuit protection products and switches. Yahoo! Finance reports eight analysts predicting a 1-year price range on LFUS between $250 and $300, with an average price target of $276.00. It’s another stock hedge funds are buying.
Littelfuse financials seem concerning, but the context behind them explains why. Q1 2024 revenue was $535.39 million, down 12.2% YOY. Net income was down 45.4% YOY. However, the company beat earnings expectations for revenue by 3.2%. The entire electronic manufacturing industry has suffered recently, specifically from weaker demand for manufacturing alongside stronger cost pressures. The materials cost index increased six points and is at the highest it’s ever been since August 2023.
Despite a down industry, Littelhouse is setting itself up for success. LFUS has opened a manufacturing plant in Piedras Negras, Coahuila, Mexico. This plant sets LFUS up for when the industry improves, where analysis from IPC has a positive industry outlook. Additionally, institutional investors have taken notice of this as well. Hedge fund EntryPoint Capital is making a $50,000 investment into LFUS. An improving industry and hedge fund investment paint a positive outlook for LFUS.
Micron Technology (MU)
Micron Technology (NASDAQ:MU) is a producer of computer memory and data storage. Yahoo! Finance reports 31 analysts predicting a one-year price range on MU between $125.00 and $427.13, with an average price target of $173.41.
Out of all the picks, Micron has standout financials. Q2 2024 revenue was up 81.53% year over year, and net income was up 117.51% year over year. The company improved its operational abilities after reporting a 10,241.67% year-over-year increase. The stock is undervalued with a 2.74 price/book ratio, under the sector median.
Micron is one of the stocks hedge funds buy, ranking fourth on Peconic Partners’ top ten stock picks. Micron is innovating in computer memory, producing the fastest Data Center SSD. Furthermore, as the AI industry grows, storage demands must meet that growth. Offering 33% faster workload completion times and taking 35% SSD energy in ML workloads make it the best Data Center SSD on the market, giving the company a distinct competitive advantage.
EntryPoint Capital acquired 348 shares this month, and Norges Bank invested $769,362,000 in a long MU position during Q4 2023, demonstrating institutional support. MU’s leadership in data center SSD innovation, alongside institutional investor reinforcement, makes it a buy.
On the date of publication, Matthew Rodrigues 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.
On the date of publication, the responsible editor did not have (either directly or indirectly) any positions in the securities mentioned in this article.
