In this article, we discuss the 10 Best Blue Chip Stocks to Buy According to Phill Gross and Robert Atchinson’s Adage Capital. You can skip our detailed analysis of Adage Capital’s strategy and the current market outlook and go directly to 5 Best Blue Chip Stocks to Buy According to Phill Gross and Robert Atchinson’s Adage Capital.
Phill Gross, a former executive at the Harvard Endowment, is in charge of the Boston-based hedge fund Adage Capital Management. Together with Robert Atchinson, Gross co-founded the money management business in 2001. Since the fund’s founding, its assets under administration have increased from $3.8 billion to $58.165 billion as of March 25, 2022. The hedge fund invests across a range of sectors, including technology, healthcare, industrials, financials, utilities, consumer goods, and energy, and has a diverse portfolio. Phill Gross, who worked at Harvard Management Company for 18 years as a healthcare analyst, is currently in charge of Adage Capital’s healthcare division. Adage Capital Management specializes in managing S&P 500 assets for foundations and endowments.
Hedge fund Adage Capital Management has one client and $58.165 billion in discretionary assets under management. Their most recent 13F filing for the second quarter of 2022 shows $43.625 billion in managed 13F securities and a 21.41% concentration in the top 10 holdings. Apple Inc. (NASDAQ:AAPL) is Adage Capital’s largest investment, with 15.9 million shares. During Q2, 2022, the hedge fund has undertaken portfolio rebalance by selling 114 stocks and reducing stakes in 411 stocks. The fund added 109 new stocks to its 13F portfolio while increasing the purchase of 278 stocks.
Some of the notable holdings of Adage Capital Management as of the end of the second quarter include Meta Platforms, Inc. (NASDAQ:META), Mastercard Incorporated (NASDAQ:MA), and JPMorgan Chase & Co. (NYSE:JPM).
Phillip Gross of Adage Capital
Robert Atchinson of Adage Capital Management
Methodology
We selected 10 stocks from Adage Capital Management’s 13F portfolio that we believe offer the ideal balance of sector leadership, solid fundamentals, and growth potential for our list. Based on the value of Adage Capital Management’s portfolio’s investment in those equities during the second quarter, we then ranked them from #10 to #1.
Best Blue Chip Stocks to Buy According to Phill Gross and Robert Atchinson’s Adage Capital
10. Biohaven Pharmaceutical Holding Company Ltd. (NYSE:BHVN)
Adage Capital Management’s Stake Value: $442.826 million
Percentage of Adage Capital Management’s Portfolio: 1.01%
Number of hedge fund holders: 58
Biohaven Pharmaceutical Holding Company Ltd. (NYSE:BHVN) develops products for neurological and neuropsychiatric diseases, as well as rare disorders. The company’s market capitalization is close to $10.81 billion as of September 22, and its yearly revenue was $462.5 million for FY 2022. Adage Capital Management, with a $442.82 million holding in Biohaven Pharmaceutical Holding Company Ltd. (NYSE:BHVN), is the fund with the highest stake in the company as of September 22, 2022. Adage Capital increased its stake in Biohaven Pharmaceutical Holding Company Ltd. (NYSE:BHVN) by 1500% during Q2 increasing its number of shares from 190,000 in Q1 to 3.039 million at the end of Q2.
At the end of the second quarter of 2022, 58 hedge funds in the database of Insider Monkey held stakes worth $2.5 billion in Biohaven Pharmaceutical Holding Company Ltd. (NYSE:BHVN), compared to 41 in the preceding quarter worth $1.3 billion. Alongwith Meta Platforms, Inc. (NASDAQ:META), Mastercard Incorporated (NASDAQ:MA), and JPMorgan Chase & Co. (NYSE:JPM), Biohaven Pharmaceutical Holding Company Ltd. (NYSE:BHVN) is one of the best stocks to buy according to Adage Capital Management.
Christopher Raymond, a Piper Sandler analyst, lowered Biohaven Pharmaceutical Holding Company Ltd. (NYSE:BHVN) stock’s rating on August 18 from Overweight to Neutral with a $149 price target, citing value as one of the main factors in the rating change.
09. Berkshire Hathaway Inc. (NYSE:BRK-A)
Adage Capital Management’s Stake Value: $491.533 million
Percentage of Adage Capital Management’s Portfolio: 1.12%
Number of hedge fund holders: 109
Berkshire Hathaway Inc. (NYSE:BRK-A), a multinational conglomerate holding corporation based in Omaha, Nebraska, was established in 1839 and has a market capitalization of $615.72 billion. Since the start of the year, Berkshire Hathaway Inc. (NYSE:BRK-A) fell 10%.
As of Q2, 2022, Adage Capital is holding 1.8 million shares of Berkshire Hathaway Inc. (NYSE:BRK-A), worth roughly $491.53 million. According to Insider Monkey’s Q2 data, Berkshire Hathaway Inc. (NYSE:BRK-A) was found in the public stock portfolios of 109 hedge funds, with collective stakes in the company worth $17.30 billion. Michael Larson’s Bill & Melinda Gates Foundation Trust is the largest shareholder of Berkshire Hathaway Inc. (NYSE:BRK-A), holding 34.68 million of its shares worth $9.47 billion.
In its Q1 2022 investor letter, Diamond Hill Large Cap Fund mentioned Berkshire Hathaway Inc. (NYSE:BRK-A) and explained its insights for the company. Here is what the fund said:
“Diversified holding company Berkshire Hathaway reported strong earnings during the quarter and benefited from continued share repurchases below intrinsic value. The company also announced significant deployments of excess cash during the quarter, including the acquisition of Alleghany and a large increase in its stake in Occidental Petroleum.”
08. UnitedHealth Group Incorporated (NYSE:UNH)
Adage Capital Management’s Stake Value: $501.511 million
Percentage of Adage Capital Management’s Portfolio: 1.14%
Number of hedge fund holders: 91
Founded in 1977, UnitedHealth Group Incorporated (NYSE:UNH) is a Minnetonka, Minnesota-based multinational managed healthcare and insurance company. Phill Gross and Robert Atchinson’s Adage Capital’s portfolio had 976,406 shares of UnitedHealth Group Incorporated (NYSE:UNH) at the end of June 2022, worth $501.511 million, representing 1.14% of the total holdings.
After the “solid” Q2 results, Mizuho analyst Ann Hynes increased the price target for UnitedHealth Group Incorporated (NYSE:UNH) to $600 from $550 on August 10. She also reiterated a Buy rating for the stock. Based on the optimistic financial outlook of UnitedHealth Group Incorporated (NYSE:UNH), the analyst increased estimations.
At the end of June 2022, 91 of the hedge funds monitored by Insider Monkey were bullish on UnitedHealth Group Incorporated (NYSE:UNH), down from 103 funds the previous quarter. The largest shareholder in the company is Rajiv Jain’s GQG Partners, which owns more than 3 million shares worth $1.60 billion.
In its Q2 2022 investor letter, Baron Durable Advantage Fund mentioned UnitedHealth Group Incorporated (NYSE:UNH) and explained its insights for the company. Here is what the fund said:
“UnitedHealth Group Incorporated is a leading diversified health and wellbeing company whose divisions include insurance arm, United Healthcare and health care services arm, Optum, which offers care delivery and other services. Shares increased 1.1% on strong first quarter results (revenues were up 14% year-over-year), and the company increased its annual guidance.
The performance was driven by Optum as a result of a growing adoption of value-based solutions. We believe UnitedHealth leads the health care industry in innovation and execution as evidenced by its strong value proposition leading to Medicare Advantage share gains, strong cost controls, and its leadership position in the shift to value-based care.”
07. Tesla, Inc. (NASDAQ:TSLA)
Adage Capital Management’s Stake Value: $569.646 million
Percentage of Adage Capital Management’s Portfolio: 1.3%
Number of hedge fund holders: 72
Tesla, Inc. (NASDAQ:TSLA) designs, develops, produces, and markets electric cars. Tesla, Inc. (NASDAQ:TSLA) was upgraded by Wolfe Research analyst Rod Lache on September 6 to Outperform from Peer Perform with a $360 price target, noting that the company would gain from the Inflation Reduction Act. 72 hedge funds in the Insider Monkey database had stakes in Tesla, Inc. (NASDAQ:TSLA) at the end of the second quarter of 2022, having a total worth of $7.16 billion, down from 80 the quarter before with stakes worth $11.2 billion. Adage Capital increased its stake in Tesla, Inc. (NASDAQ:TSLA) during Q2 by 16%, holding 845,900 of its shares, having a total worth of $569.646 million, comprising 1.3% of the fund’s 13F portfolio.
Just like Meta Platforms, Inc. (NASDAQ:META), Mastercard Incorporated (NASDAQ:MA), and JPMorgan Chase & Co. (NYSE:JPM), Tesla, Inc. (NASDAQ:TSLA) is one of the best stocks to buy, according to Adage Capital Management.
In its Q2 2022 investor letter, Baron Fund mentioned Tesla, Inc. (NASDAQ:TSLA) and explained its insights for the company. Here is what the fund said:
“In 2014, before we began to invest in Tesla (NASDAQ:TSLA), I called Roger to ask whether he thought Elon Musk’s electric car business would succeed. I did not believe that Roger, an owner of dealerships that sell cars powered by internal combustion engines (ICE) would likely have a favorable opinion of Tesla’s prospects. That was principally for two reasons:
- First, automobile manufacturing and distribution is unusually complicated, capital intensive, and highly regulated, which makes profitability problematic;
- second, cars with ICE motors require extensive annual maintenance, and dealer services revenues, not profits from automobile sales, are the most important contributor to profits of perpetual licensed ICE car dealerships.
Penske Automotive Group is principally an ICE car dealer. Since electric cars are powered by batteries and need little service, franchised dealerships are incented to sell ICE not EV automobiles. Further, Roger had been a long-term director of General Motors. General Motors’ ICE automobile business would be disrupted if Tesla were successful.
Regardless, I was right to have spoken with Roger. That was since he outlined numerous issues we needed to consider, study, and question before we determined whether we believed Tesla could be a successful business…before we ultimately chose whether to invest in that company.
When we completed our initial due diligence on Tesla, which diligence has been ongoing since 2014, we decided to invest $360 million in Tesla over the next two years. I then called Roger and outlined why I thought we could earn 20 times our capital over the next 10 years. Roger was so certain I was wrong that he offered to bet me $1 million that Tesla would fail. “Roger, I can’t bet you a million dollars. First, if you are right, I couldn’t afford to pay you. Second, if I’m right, you’re my friend, and I couldn’t take your money.” We settled on a dinner bet…”
06. Exxon Mobil Corporation (NYSE:XOM)
Adage Capital Management’s Stake Value: $587.423 million
Percentage of Adage Capital Management’s Portfolio: 1.34%
Number of hedge fund holders: 72
Exxon Mobil Corporation (NYSE:XOM), a natural gas company based in Irving, Texas, was established in 1999. On July 29, the company posted quarterly earnings per share figure of $4.14 and a revenue of $115.68 billion, both above the market consensus. On September 12, Piper Sandler analyst Ryan Todd kept the Exxon Mobil Corporation (NYSE:XOM) stock at an Overweight rating but dropped the price target to $108 from $109, adding that despite the risk of inflation, the strategic priority for the upstream coverage had not changed.
With 47.5 million shares valued at more than $4.1 billion, Florida-based investment company GQG Partners is one of the largest shareholders in Exxon Mobil Corporation (NYSE:XOM) among the hedge funds Insider Monkey is monitoring. As of Q2, Exxon Mobil Corporation (NYSE:XOM) comprises 1.34% of Adage Capital’s 13F portfolio. The fund reduced its stake in Exxon Mobil Corporation (NYSE:XOM) by 29% during Q2, holding 6.85 million of its shares valued at $587.423 million.
In its Q2 2022 investor letter, First Eagle Investments Global Fund mentioned Exxon Mobil Corporation (NYSE:XOM) and explained its insights for the company. Here is what the fund said:
“Integrated oil and gas giant Exxon Mobil performed well in the second quarter as continued high prices for energy products supported the stock. As the largest refiner in the US, the company has benefitted from wide “crack spreads,” or the margin between the cost of crude oil and the petroleum products extracted from it. Exxon continues to invest in refining capacity in the US, which industrywide has been in steady decline since 2019. We are pleased that Exxon has been using its strong cash flows to reduce debt and to return cash to shareholders through dividends and stock repurchases.”
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Disclosure: None. 10 Best Blue Chip Stocks to Buy According to Phill Gross and Robert Atchinson’s Adage Capital is originally published on Insider Monkey.
