In this piece, we will take a look at the ten high quality S&P 500 stocks billionaires are loading up on. For more stocks, head on over to 5 High Quality S&P 500 Stocks Billionaires Are Loading Up On.
As the first half of 2023 comes to an end, the primary concern on anyone’s mind is whether there will be a recession this year. Courtesy of modern day data collection and analysis capabilities, policymakers are able to have some insight into how the economy is performing to tailor their decisions accordingly. And this data is crucial in enabling the Federal Reserve to decide whether it will further increase interest rates or consider pausing and gradually bringing them down.
On this front, June started with a crucial data reading from the Labor Department. This revealed that the labor market remained strong and added 339,000 jobs in May. This indicates that despite the record interest rate hikes by the Fed, the economy remains resilient – lending credence to speculation that perhaps more interest rate increases might be on the cards. However, for the interest rate bears, the unemployment rate also increased by 0.3% to sit at 3.7% – the largest jump since the start of the coronavirus pandemic’s economic disruption in April 2020.
So what does this mean for the stock market? In more normal times, a potential economic slowdown would lead to the stock market dropping as well – but the contrarian nature of the two primary metrics within this report made studying the immediate impact on the market even more interesting. Overall, markets reacted positively, as the NASDAQ index rose by 1%, the S&P 500 by 1.45%, and the Dow Jones Industrial Average (DJIA) by 2.12%. This indicated that investors had taken the rise in unemployment and a reduction in wage growth as the primary takeaway from the labor report, using these to form opinions that believe that the Fed will not deliver an interest rate hike late this month.
However, the jobs report is only one part of the Fed’s decision making process. An equally important metric is the inflation report that will come out on the same day the Fed officials will meet to set the policy rate. And while there are few estimates available as to what might happen later this month, there are other metrics that point at the consumer and broader economic sentiment. One such metric is the Consumer Confidence Index which aims to look at household expectations of their financial situations for the near future. This index dropped to 102.3 in May from 103.7 in April as the broader gloom about the debt ceiling standoff between Congress and the President weighed on consumers’ minds. At the same time, long term inflation expectations also dropped and stood at 6.1% for the next twelve months as they marked a new low since January 2021.
Speaking of which, it’s not only the households that believe inflation will come down. The two-year breakeven inflation (BEI) rate for inflation protection bonds dropped below 2% in May for the first time in years, indicating that bond investors believe that inflation will fall below this rate in the coming years as well. This is in strong contrast to a reading of 3% for the start of 2023. Finally, Fed Funds Futures pricing data gathered through the CME FedWatch Tool shows that there is a 75% probability that interest rates will remain unchanged this month. However, this might make for some early optimism since the picture changes when we consider the outlook for July. For July, there is a 53.5% probability that the Fed will deliver a 25 basis point hike.
So how is this choppy environment making an impact on investment managers? Well, on this front, the management of Morgan Stanley (NYSE:MS) shared some insights at the bank’s earnings call for the first quarter of 2023 where they outlined:
Overall margin in the Wealth Management business was 26%, impacted by modest increases in credit reserves, slightly lower growth of NII versus forecast and ongoing integration expenses. We continue to focus on the levers within our control with an eye towards expense management. In ISG, underwriting and M&A remain very subdued. As I have said previously, these are revenues delayed, not dead. Already, we are seeing a growing M&A pipeline and some spring-like signs of new issuance emerging. That said, it largely remains a back half 2023 and full year 2024 story.On the positive side, our fixed income and equity trading teams performed very well in managing through some historic rate moves.
Total trading revenues were solid. I expect the markets to remain choppy through this earnings season and for the next several months. However, absent any geopolitical surprise or limited progress on bringing down inflation, I think 2023 is likely to end on a constructive note in most areas. Morgan Stanley is very well positioned not just for 2023, but for several years ahead as we see significant growth opportunities across all three of our client platforms.I will now pass it over to Sharon for more details on the first quarter. Sharon Yeshaya Thank you, and good morning. The firm produced revenues of $14.5 billion in the first quarter, our EPS was $1.70, and our ROTCE was 16.9%. The firm’s results demonstrated the durability of our business model, evidenced by the resilient ROTCE, robust asset consolidation and wealth and our stable capital and liquidity levels.
In institutional securities, fixed income and equity supported our clients while navigating volatile markets. Wealth Management showcased $110 billion of net new assets and investment management continued to benefit from the investments we have made to diversify our offerings.
With these details in mind, let’s take a look at the top S&P 500 stocks that have found favor among billionaires, as the index and the individuals represent the best of both worlds, particularly in this uncertain economic environment. Some top picks are Amazon.com, Inc. (NASDAQ:AMZN), Microsoft Corporation (NASDAQ:MSFT), and Salesforce, Inc. (NYSE:CRM).
Our Methodology
To compile our list of the best S&P 500 stocks that billionaires are buying we first selected 31 stocks in the S&P 500 index with the highest weights. Then, the number of hedge funds owned, managed, or set up by billionaires that had invested in them was determined using Insider Monkey’s database of billionaire-owned stocks. The final list of top S&P 500 stocks seeing interest from billionaires is as follows.
High Quality S&P 500 Stocks Billionaires Are Loading Up On
10. Mastercard Incorporated (NYSE:MA)
Number of Billionaire Investors In Q1 2023: 20
Mastercard Incorporated (NYSE:MA) is a financial technology company that is one of the oldest in the industry. It is primarily known for its payment cards that are provided through banks. Apart from these, Mastercard Incorporated (NYSE:MA) also provides payment processing services and user analytics products.
138 of the 943 hedge funds part of Insider Monkey’s database had held a stake in Mastercard Incorporated (NYSE:MA) during this year’s first quarter. Out of these, the firm’s largest shareholder is Charles Akre’s Akre Capital Management with a $2.1 billion stake.
Along with Microsoft Corporation (NASDAQ:MSFT), Amazon.com, Inc. (NASDAQ:AMZN), and Salesforce, Inc. (NYSE:CRM), Mastercard Incorporated (NYSE:MA) is a top S&P500 stock finding favor with billionaires.
9. Walmart Inc. (NYSE:WMT)
Number of Billionaire Investors In Q1 2023: 20
Walmart Inc. (NYSE:WMT) is a retailer based in Bentonville, Arkansas. One of the largest firms of its kind, it has millions of employees and thousands of stores. Through these, it sells a wide variety of products such as packaged food, condiments, and other groceries.
91 of 943 hedge funds part of Insider Monkey’s first quarter of 2023 survey had held a stake in Walmart Inc. (NYSE:WMT). The retailer’s largest shareholder in our database is Ken Fisher’s Fisher Asset Management through owning 8.6 million shares that are worth $1.2 billion.
8. Alphabet Inc. (NASDAQ:GOOG)
Number of Billionaire Investors In Q1 2023: 20
Alphabet Inc. (NASDAQ:GOOG) is a technology behemoth. It owns a diverse set of technology businesses, such as artificial intelligence, cloud computing, consumer electronics, video streaming, and of course, search engine. The firm is based in Mountain View, California.
155 of the 943 hedge funds part of Insider Monkey’s Q1 2023 database own a stake in Alphabet Inc. (NASDAQ:GOOG). Out of these, the largest shareholder is Ken Fisher’s Fisher Asset Management with a $4.3 billion investment.
7. NVIDIA Corporation (NASDAQ:NVDA)
Number of Billionaire Investors In Q1 2023: 22
NVIDIA Corporation (NASDAQ:NVDA) is one of the world’s most valuable semiconductor firms. It primarily designs graphics processing units (GPUs) which are used for gaming, artificial intelligence, data center and other applications.
By the end of March 2023, 132 of the 943 hedge funds profiled by Insider Monkey had bought the chip maker’s shares. NVIDIA Corporation (NASDAQ:NVDA)’s largest hedge fund investor is Ken Fisher’s Fisher Asset Management with a $2.7 billion investment.
6. Visa Inc. (NYSE:V)
Number of Billionaire Investors In Q1 2023: 24
Visa Inc. (NYSE:V) is another payments platform provider with a similar business model to Mastercard. Like its competitor, it also provides transaction processing, payment cards, data analytics, and other services. The firm is headquartered in San Francisco, California.
After digging through 943 hedge funds for their March quarter of 2023 investments, Insider Monkey discovered that 713 had invested in the company. Visa Inc. (NYSE:V)’s largest investor is Chris Hohn’s TCI Fund Management through a $4.3 billion stake.
Visa Inc. (NYSE:V), Amazon.com, Inc. (NASDAQ:AMZN), Microsoft Corporation (NASDAQ:MSFT), and Salesforce, Inc. (NYSE:CRM) are some top S&P500 stocks that billionaires are buying.
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Disclosure: None. 10 High Quality S&P 500 Stocks Billionaires Are Loading Up On is posted on Insider Monkey.
