In this piece, we will take a look at the ten “dumbest” companies to invest in. For more dumb companies, head on over to 5 Dumbest Companies to Invest In.
The modern day corporate world is all about innovation. Companies that either radically transform their business operations or remain ahead of the curve with unique products take it all in the market. These days, the two strongest examples of these phenomena are the rise of the Taiwan Semiconductor Manufacturing Company (NYSE:TSM) and Space Exploration Technologies Corporation (SpaceX). On the surface, the two firms could not be more different, particularly when it comes to their products. This is because TSMC, which is the world’s largest contract chip manufacturer concerns itself with manufacturing semiconductors. The latest of these products have feature sizes that are as small as 3-nanometer – a dimension that seems ‘meh’ until you consider that a human hair is at least 80,000 nanometers wide. The Taiwanese chipmaker has led the market and caught up with the U.S. chip giant Intel Corporation (NASDAQ:INTC) by transforming itself into a one stop shop for the world’s leading technology firms including Apple Inc. (NASDAQ:AAPL), NVIDIA Corporation (NASDAQ:NVDA), Advanced Micro Devices, Inc. (NASDAQ:AMD), and even old rival Intel Corporation (NASDAQ:INTC).
On the other end of the spectrum is SpaceX. Tasked with building some of the most advanced machines on Earth, SpaceX is currently testing its massive 394 feet tall and 30 feet wide rocket Starship in Boca Chica, Texas. SpaceX has achieved what was thought impossible in the astronautics industry – namely landing a rocket booster on either land or sea and then reusing it. If that weren’t enough, the company plans to recover both the first and second stages of its rockets when it finally does fly Starship. The rocket’s complexity is further compounded by the fact that its first stage will use 33 Raptor 2 rocket engines – a rare rocket in human history to do so. SpaceX’s product development approach, which is to aim big, simplify complex problems, and fail fast has also allowed the company to build the world’s largest satellite internet constellation. SpaceX’s Starlink, which uses small satellites to provide internet connectivity, is made up of thousands of satellites with thousands yet to be launched. Starlink already holds the Guinness world record for the largest constellation, and over the course of the decade aims to launch tens of thousands of satellites.
With these details in mind, the MIT Technology Review, a publication of the Massachusetts Institute of Technology (MIT) has a list of the top 50 smartest companies that it believes are disruptive in the modern age of computing and high technology. MIT chooses both small and large companies, as it describes its list consisting of players that are “old-guard giants betting on technology renewal” and others that are eager startups. Crucially, it also takes a look at the future to pick out those firms that it believes will be the “dominant companies of the future.”
MIT also looks at what it calls “superstar companies.” It quotes research done in partnership with Harvard University to outline that these are companies that are the largest players in their industry and they have increased their dominance over the past few years. The university adds that these companies dominate because they take advantage of the latest trends better than others, and concludes by stating:
In other words, you have to be the smartest company in your field or you might as well not bother.
Photo by Taton Moïse on Unsplash
Our Methodology
Taking a look at MIT’s list, which consists of a diverse category of firms from biotechnology, to cars and personal computing an idea crossed our mind. While the university, which is also one of the ‘smartest’ universities in the world focused on the smartest companies, what if we looked at which companies are popular with hedge funds but didn’t make MIT’s cut of intelligence? This led us to analyze Insider Monkey’s database of 920 hedge funds to see which of the top fifty firms weren’t picked by MIT. These firms are listed below and are ranked by the total number of hedge fund investors as of the third quarter of 2022. To be clear, we don’t think the following companies are dumb at all. It is more likely that MIT overlooked these smart companies, but hedge funds didn’t.
10 “Dumb” Companies to Invest In
10. ServiceNow, Inc. (NYSE:NOW)
Hedge Fund Investors as of Q3 2022: 103
ServiceNow, Inc. (NYSE:NOW) is an American company set up in 2004 and headquartered in Santa Clara, California. The firm is an enterprise computing service provider. It allows customers to use a wide variety of modern technologies such as artificial intelligence, machine learning, robotic automation, encryption, and big data analysis to automate and manage their workflows. Its customers are present in finance, telecommunications, healthcare, technology, energy, and other industries. ServiceNow, Inc. (NYSE:NOW) also caters to the needs of governments.
However, ServiceNow, Inc. (NYSE:NOW) is currently on the radar of activist investors, with the famed Paul Singer’s Elliot Management confirming earlier this month that it had bought a stake in the company. Investors are concerned that the firm’s chief is not focused on the company. By the end of Q3 2022, 103 of the 920 hedge funds polled by Insider Monkey had bought ServiceNow, Inc. (NYSE:NOW)’s shares.
ServiceNow, Inc. (NYSE:NOW)’s largest investor is Chase Coleman and Feroze Dewan’s Tiger Global Management LLC which owns 1.6 million shares that are worth $639 million.
ServiceNow, Inc. (NYSE:NOW) joins Mastercard Incorporated (NYSE:MA), Uber Technologies, Inc. (NYSE:UBER), and Visa Inc. (NYSE:V) on our list of the dumbest companies to invest in.
9. Berkshire Hathaway Inc. (NYSE:BRK-B)
Hedge Fund Investors as of Q3 2022: 104
Berkshire Hathaway Inc. (NYSE:BRK-B) is an American holding company that is one of the largest investment firms in the world. The company is headed by the legendary Warren Buffett – who is one of the richest and most philanthropic individuals in the world. Berkshire Hathaway Inc. (NYSE:BRK-B) has interests and stakes in all kinds of business that range from traditional firms to high technology companies. These range from the retail, energy, banking, and media industries to advanced sectors such as semiconductor manufacturing and consumer technology. As an example, it is the largest investor of both Apple Inc (NASDAQ:AAPL) and the Taiwan Semiconductor Manufacturing Company (NYSE:TSM).
Mr. Buffett’s investment strategy proved why he’s considered a finance czar as during the current turbulent and uncertain economic environment, he surpassed both Microsoft Corporation (NASDAQ:MSFT) founder Bill Gates and Amazon.com, Inc. (NASDAQ:AMZN)’s former chief Jeff Bezos in net worth last month. Insider Monkey’s September quarter of 2022 survey of 920 hedge funds revealed that 104 had bought Berkshire Hathaway Inc. (NYSE:BRK-B)’s shares.
Michael Larson’s Bill & Melinda Gates Foundation Trust is Berkshire Hathaway Inc. (NYSE:BRK-A)’s largest investor with a $7.9 billion stake that comes via 29 million shares.
8. JPMorgan Chase & Co. (NYSE:JPM)
Hedge Fund Investors as of Q3 2022: 110
JPMorgan Chase & Co. (NYSE:JPM) is the world’s largest private bank. It is also one of the oldest banks in the world and was set up in 1799 – soon after the American Revolution. The firm provides services to all kinds of customers, from retail banking users to corporate entities, investors, and wealthy individuals. Some of its services include accounts, loans, and working capital finance.
JPMorgan Chase & Co. (NYSE:JPM) is rumored to be one of the several financial firms that are looking to fund the Italian soccer league Serie A’s attempts at making a profit from its media businesses. The bank is rumored to be interested in providing as much as $761 million in financing. 110 of the 920 hedge funds polled by Insider Monkey had bought JPMorgan Chase & Co. (NYSE:JPM)’s shares during the third quarter of 2022.
JPMorgan Chase & Co. (NYSE:JPM)’s largest hedge fund shareholder is Ken Fisher’s Fisher Asset Management which owns 7.8 million shares that are worth $820 million.
7. UnitedHealth Group Incorporated (NYSE:UNH)
Hedge Fund Investors as of Q3 2022: 110
UnitedHealth Group Incorporated (NYSE:UNH) is a healthcare company that provides healthcare benefit plans for employees of several organizations, health management services, services outsourcing to hospitals, and pharmacy services. The firm is headquartered in Minnetonka, Minnesota.
A little known fact about UnitedHealth Group Incorporated (NYSE:UNH) is that it is the largest physician employer in America. The firm’s Optum group employs more than 60,000 physicians, which provide a wide variety of services such as surgery and critical care. By the end of 2022’s September quarter, 110 of the 920 hedge funds part of Insider Monkey’s study had bought UnitedHealth Group Incorporated (NYSE:UNH)’s shares.
Rajiv Jain’s GQG Partners is UnitedHealth Group Incorporated (NYSE:UNH)’s largest shareholder. It owns 3.2 million shares that are worth $1.6 billion.
6. The Walt Disney Company (NYSE:DIS)
Hedge Fund Investors as of Q3 2022: 112
The Walt Disney Company (NYSE:DIS) is an iconic media and entertainment firm. Set up in 1923, the firm is headquartered in Burbank, California. Disney’s theme parks are famous all over the globe and are major tourist attractions wherever they are located. Additionally, it also has a large portfolio of media properties, which includes television channels and movie production houses.
The Walt Disney Company (NYSE:DIS) made shockwaves in November 2022, when the firm’s former chief Mr. Bob Iger returned to the company after retiring earlier. The news surprised many, and it pointed out deeper problems at the company especially when it comes to succession management. Insider Monkey took a look at 920 hedge funds for their Q3 2022 investments to discover that 112 had bought The Walt Disney Company (NYSE:DIS)’s shares.
The Walt Disney Company (NYSE:DIS)’s largest investor is Ken Fisher’s Fisher Asset Management which owns 5.1 million shares that are worth $484 million.
Alongside Uber Technologies, Inc. (NYSE:UBER), Mastercard Incorporated (NYSE:MA), and Visa Inc. (NYSE:V), The Walt Disney Company (NYSE:DIS) is one dumb company that hedge funds are piling into.
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Disclosure: None. 10 Dumbest Companies to Invest In is originally published on Insider Monkey.
