In this article, we will share the insights on 10 large-cap stocks hedge funds are talking about. You can skip the first five stocks and our comprehensive analysis of the background for these companies by going go directly to 5 Large-Cap Stocks Hedge Funds Are Talking About.
The S&P 500, the benchmark for large-cap US stocks, has fallen 10% since the beginning of the year. This fits into the fix or correction area for the indexes that savvy investors are most interested in. Buying during a correction is often a winning game in the long run. However, investors should be aware that these periods are volatile and can lead to large losses if not timed correctly.
Thought their associated indexes are down, large-cap companies do have several tailwinds. In 2021, their revenues exceeded expectations. In addition, corporate acquisitions have accelerated. However, many risks remain. Inflation is a major risk and inflation will need to moderate slightly for a strong bullish outlook to materialize.
We are currently under a stock picker’s market and Insider Monkey has behind-the-scenes access into the minds of some of the sharpest stock pickers on the planet. We have been busy been reviewing several investor letters from hedge funds and other prominent investors to identify the different companies that smart money is focusing on right now. You can check out all of these letters from hedge funds and prominent investors on our hedge fund investor letters 2021 Q4 page.
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Our Methodology
The following list consists of the 10 most popular large-cap stocks with market caps not exceeding $37 billion, based on the database of 924 elite funds tracked by Insider Monkey that filed 13Fs for the December 2021 reporting period. We ranked each stock based on the number of hedge fund holders. We’ve provided updated stock returns and hedge fund comments for additional context on each stock.
10 Large-Cap Stocks Hedge Funds Are Talking About
10. Biogen Inc. (NASDAQ:BIIB)
Market Capitalization as of Feb. 25, 2022: $30.5B
Number of Hedge Fund Holders: 63
Miller Value Partners recently released its Q2 2021 Investor Letter, a copy of which you can download here. The Miller Opportunity Trust Class I gained 4.18%, underperforming its benchmark, the S&P 500 Index which returned 8.55% in the same quarter. You should check out Miller Value Partners’ top 5 stock picks for investors to buy right now, which could be the biggest winners of this year.
In the Q2 2021 Investor Letter, the fund highlighted a few stocks, and Biogen Inc. (NASDAQ:BIIB) was one of them. Biogen Inc. (NASDAQ:BIIB) is a biotechnology company. In the last three months, Biogen Inc. (NASDAQ:BIIB) stock lost 6%. Here is what the fund said:
“We started building a position in Biogen (BIIB) following the approval in early June of Aduhelm, their controversial Alzheimer’s drug. The stock initially traded up to an intra-day high of $468.55 and subsequently traded down to a low of $340.27 near the end of June. We believe the significant unmet need will lead to higher than expected demand for the drug.”
9. Paramount Global (NASDAQ:PARA)
Market Capitalization as of Feb. 25, 2022: $19.3B
Number of Hedge Fund Holders: 64
Ariel Investments, an investment management firm, published its “Ariel Focus Fund” third quarter 2021 investor letter – a copy of which can be downloaded here. Ariel Focus Fund returned -4.71% in the third quarter, trailing the Russell 1000 Value Index, which lost -0.78%, and the S&P 500 Index which gained 0.58%. Through the third quarter of 2021, the Ariel Focus Fund had gained 15.44% compared to 16.14% for the Russell 1000 Value Index and 15.92% for the S&P 500. You can take a look at the fund’s top 5 holdings to have an idea about their best picks for 2021.
Ariel Focus Fund mentioned ViacomCBS Inc. (NASDAQ: VIAC), which changed its name to Paramount Global in February, in the fund’s Q3 2021 investor letter, where it discussed its stance on the firm. Paramount Global is a New York-based mass media company with a $19.3 billion market capitalization. PARA shares have gained 5.68% since the beginning of the year, while its 12-month returns are down by 59.28%. The stock closed at $29.56 per share on February 25, 2022.
Here is what Ariel Focus Fund had to say about ViacomCBS Inc. (NASDAQ: VIAC) in its Q3 2021 investor letter:
“Leading entertainment company, ViacomCBS Inc. (VIAC) was the top contributor to relative performance over the trailing one-year period. Shares continued to benefit from solid earnings results and continued investor enthusiasm surrounding the launch of Paramount+ and other international streaming video on demand services. As the price of ViacomCBS Inc. substantially increased during the period, management announced an equity offering and a mandatory convertible preferred stock offering to further support investment in its streaming services. Shares began to tumble on the news, as an overleveraged family office, Archegos Capital Management, became a forced seller of the company. As prices moved closer to our assessment of intrinsic value, we reduced our position size in the company, insulating our portfolios from the largest weekly decline in the stock’s history and maintaining its status as a top contributor.”
8. TransDigm Group Incorporated (NYSE:TDG)
Market Capitalization as of Feb. 25, 2022: $36.7 B
Number of Hedge Fund Holders: 64
Vulcan Value Partners, an investment management firm, published its “Large Cap, Small Cap, Focus Composite, Focus Plus Composite, and All Cap Composite” second quarter 2021 investor letter – a copy of which can be downloaded here. Vulcan’s Large Cap Composite Fund delivered a 12.4% net return for the second quarter of 2021, including 9.9% gains for its Small Cap strategy, 14.8% for the Focus Composite Fund, 13.9% by the Focus Plus Composite Fund, and 13.6% by the All Cap Composite Fund. You can view the fund’s top 5 holdings to have a peek at their top bets for 2022.
In the Q2 2021 investor letter of Vulcan Value Partners, the fund mentioned TransDigm Group Incorporated (NYSE: TDG) and discussed its stance on the firm. TransDigm Group Incorporated is a Cleveland, Ohio-based aerospace manufacturing company, that currently has a $36.7 billion market capitalization. TDG shares are down by 1.33% since the beginning of the year, lowering their 12-month returns to 4.41%.
Here is what Vulcan Value Partners had to say about TransDigm Group Incorporated (NYSE: TDG) in its Q2 2021 investor letter:
“TransDigm Group Inc., another material contributor during the quarter, is an aerospace manufacturer providing highly engineered, niche components for use on commercial and military aircraft. The vast majority of the company’s profits come from aftermarket sales. Its business was impacted by the global pandemic; however, the company has been able to maintain margins despite strong revenue headwinds, and it continues to generate strong free cash flow.”
7. Bill.com Holdings, Inc. (NYSE:BILL)
Market Capitalization as of Feb. 25, 2022: $23.7B
Number of Hedge Fund Holders: 65
Alger, an investment management firm, published its “Alger Mid Cap Focus Fund” fourth quarter 2021 investor letter – a copy of which can be downloaded here. During the fourth quarter, the largest portfolio sector weightings were Information Technology and Industrials. The largest sector overweight was Industrials. The portfolio had no exposure to the Utilities or Materials sectors and negligible exposure to the Real Estate sectors. Spare some time to check the fund’s top 5 holdings to have a clue about their top bets for 2022.
Alger Mid Cap Focus Fund, in its Q4 2021 investor letter, mentioned Bill.com Holdings, Inc. (NYSE: BILL) and discussed its stance on the firm. Bill.com Holdings, Inc. is a San Jose, California-based software company with a $23.7 billion market capitalization. BILL shares are down by 12.11% since the beginning of the year, dragging its 12-month returns down to 38% gains.
Here is what Alger Mid Cap Focus Fund had to say about Bill.com Holdings, Inc. (NYSE: BILL) in its Q4 2021 investor letter:
“Bill.com Holdings, Inc., was among the top detractors from performance. Bill.com provides cloud-based software solutions that simplify, digitize, and automate complex back-office financial operations for small and medium size businesses. Its software helps customers to generate and process invoices, streamline approvals, send and receive payments, synchronizing data with their accounting system and manage their cash.”
6. Liberty Broadband Corporation (NASDAQ:LBRDK)
Market Capitalization as of Feb. 25, 2022: $26 B
Number of Hedge Fund Holders: 65
Weitz Investment Management, an investment management firm, published its “Value Fund” fourth quarter 2021 investor letter – a copy of which can be downloaded here. In its letter, the fund mentioned that it knows very little in economics, politics, and investor psychology is predictable. The fund believes, though, that business value is (roughly) measurable and that it (eventually) exerts a gravitational pull on a company’s stock price.
According to Weitz Investment, when confidence is shaken and markets are volatile, active managers have the raw material they need to add value for investors. We’re looking forward to an interesting year. Spare some time to check the fund’s top 5 holdings to have a clue about their top bets for 2022.
Weitz Investment Management, in its Q4 2021 investor letter, mentioned Liberty Broadband Corporation (NASDAQ: LBRDA) and discussed its stance on the firm. Liberty Broadband Corporation is an Englewood, Colorado-based holding company with a $26 billion market capitalization. LBRDA shares have lost 17.94% return since the beginning of the year, while their 12-month losses stand at 9.79%.
Here is what Weitz Investment Management, Inc. had to say about Liberty Broadband Corporation (NASDAQ: LBRDA) in its Q4 2021 investor letter:
“Finally, a couple of old favorites. Liberty Broadband owns 26% of Charter Communications, the second-largest U.S. cable company. Charter finished the year -20.6% from its recent high, and we believe it is a cheap stock in its own right. Liberty Broadband, whose primary asset is its Charter shares, offers Charter ownership at a discount. Another Liberty company, Liberty SiriusXM, owns over 80% of SiriusXM Satellite Radio. We believe that SiriusXM is undervalued and that the Liberty SiriusXM structure allows us to own the company at a discount. Both Charter Communications and SiriusXM are growing nicely, generating prodigious amounts of free cash flow and buying back lots of their own stock. John Malone controls both of these Liberty securities, and we believe he will find ways to close the discounts and extract maximum value for shareholders. Both Liberty securities were stock market duds in 2021, but we expect them to be contributors in 2022 regardless of what the general market does.”
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Disclosure: None. 10 Large-Cap Stocks Hedge Funds Are Talking About is originally published on Insider Monkey.
