In this article, we discuss 10 under-the-radar stocks billionaires are loading up on. You can skip our detailed analysis of the market and its outlook this year, and go directly to read 5 Under-the-Radar Stocks Billionaires Are Loading Up On.
The financial turmoil started in 2022 also affected the hedge fund industry as it lost about $125 billion worth of assets last year, according to a report by Hedge Fund Research (HFR). The global hedge fund industry’s assets amounted to $3.8 trillion at the end of the year. Last year was also one of the worst for the sector in terms of returns since the Global Financial Crisis of 2008. HFRI 500 Fund Weighted Composite Index, which tracks the performance of some of the biggest global hedge funds, reported that overall hedge funds fell by 4.25% in 2022, with equity hedge funds declining by 10.37%.
Despite this performance, some of the biggest funds managed to deliver stable returns, compensating for the losses of the overall industry. Bloomberg reported that major hedge funds like Citadel Investment Group and Millennium Management produced double-digit gains last year. The report also mentioned that the funds with a focus on macroeconomic trends also reported strong gains. These funds made bets on stocks benefitting from inflation and consistent interest rate hikes, which was a smart move considering analysts’ prediction of a shaky market this year as well.
Also read: Dividend Champions vs Aristocrats: 12 Under-the-Radar Stocks to Consider
These unstable market conditions push investors to seek conservative investments in well-known companies due to their brand reputation, financial strength, and market dominance. Chevron Corporation (NYSE:CVX), Medtronic plc (NYSE:MDT), and The Coca-Cola Company (NYSE:KO) are some of the most well-known corporations that grab the attention of individual investors because they are perceived as more stable and less risky. However, some investors actively seek opportunities in lesser-known companies once they recognize their strong underlying fundamentals. For this reason, we have compiled a list of under-the-radar stocks billionaires are loading up on.
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Our Methodology:
We scanned the list of billionaire-owned stocks in Insider Monkey’s database as of Q1 2023 and picked companies that have market capitalizations below $30 billion and are comparatively lesser known among average investors. These companies have strong fundamentals and growth prospects and can offer great investment opportunities. We also measured hedge fund sentiment around each stock from our database of 943 hedge funds at the end of Q1. The stocks are ranked in ascending order of the number of billionaire investors having stakes in them.
10. Weatherford International plc (NASDAQ:WFRD)
Number of Billionaire Investors: 11
Number of Hedge Fund Holders: 34
Weatherford International plc (NASDAQ:WFRD) is an American-Irish oilfield services company that offers innovative energy services to different markets. The company reported strong earnings in the first quarter of 2023. It generated roughly $1.2 billion in revenues, up 27% from the same period last year. The company’s operating income of $185 million and its net income of $72 million grew by 928% and 190% year-over-year, respectively.
Weatherford International plc (NASDAQ:WFRD) also showed a solid cash position in the most recent quarter. The company’s operating cash flow came in at $84 million and its free cash flow amounted to $27 million. This under-the-radar stock remained popular among billionaires, including Donald Yacktman and D. E. Shaw in Q1.
Though WFRD is lesser-known among investors, it can be added to portfolios due to its strong earnings alongside popular companies, such as Chevron Corporation (NYSE:CVX), Medtronic plc (NYSE:MDT), and The Coca-Cola Company (NYSE:KO).
In May, Raymond James initiated its coverage on Weatherford International plc (NASDAQ:WFRD) with a Strong Buy rating and a $100 price target. The firm noted that the company is one of the largest providers of diversified oilfield products and services to the energy industry.
At the end of Q1 2023, 34 hedge funds in Insider Monkey’s database owned stakes in Weatherford International plc (NASDAQ:WFRD), up from 33 in the previous quarter. The collective value of these stakes is over $882 million.
9. Cirrus Logic, Inc. (NASDAQ:CRUS)
Number of Billionaire Investors: 12
Number of Hedge Fund Holders: 28
Cirrus Logic, Inc. (NASDAQ:CRUS) is a Texas-based semiconductor company that specializes in analog and integrated circuits. In May, TD Cowen maintained an Outperform rating on the stock with a $100 price target, presenting a neutral stance on the company’s performance this year as it confirmed no new HPMS socket.
In fiscal Q4 2023, Cirrus Logic, Inc. (NASDAQ:CRUS) posted an EPS of $0.92, which beat analysts’ estimates by $0.08. The company’s revenue of $372.8 million also surpassed consensus by $5.5 million. At the end of March 2023, it had over $445.7 million available in cash and cash equivalents, up from $370 million in the prior-year period. The company’s operating cash flow for the quarter came in at $48.2 million.
As of the close of Q1 2023, 28 hedge funds tracked by Insider Monkey held stakes in Cirrus Logic, Inc. (NASDAQ:CRUS), the same as in the previous quarter. These stakes have a consolidated value of $235.5 million. Billionaire Cliff Asness’ AQR Capital Management was the company’s leading stakeholder in Q1.
8. Flex Ltd. (NASDAQ:FLEX)
Number of Billionaire Investors: 12
Number of Hedge Fund Holders: 64
Flex Ltd. (NASDAQ:FLEX) is a multinational diversified company that provides technology, supply chain, and manufacturing solutions. It is one of the under-the-radar stocks billionaires are loading up on. According to our database, 12 billionaires held stakes in the company in Q1, including D. E. Shaw and Larry Robbins.
In its fiscal Q4 2023, Flex Ltd. (NASDAQ:FLEX) reported revenue of $7.48 billion, up 9.2% from the same period last year. The company’s operating cash flow came in at over $950 million. At the end of March 2023, it had roughly $3.3 billion in cash and cash equivalents, compared with $2.9 billion in the prior-year period.
Credit Suisse raised its price target on Flex Ltd. (NASDAQ:FLEX) to $28 and maintained a Buy rating on the shares. The firm expects the company to show margin expansions while benefiting from production onshoring.
The number of hedge funds tracked by Insider Monkey owning stakes in Flex Ltd. (NASDAQ:FLEX) grew to 64 in Q1 2023, from 61 in the previous quarter. These stakes have a collective value of over $1.56 billion.
7. Reata Pharmaceuticals, Inc. (NASDAQ:RETA)
Number of Billionaire Investors: 12
Number of Hedge Fund Holders: 31
Reata Pharmaceuticals, Inc. (NASDAQ:RETA) is an American pharmaceutical company that mainly specializes in investigating anti-inflammatory drugs. In May, Ladenburg raised its price target on the stock to $104 and kept a Buy rating on the shares, following the company’s recent quarterly earnings. The firm also highlighted the strong initial demand for the company’s products.
In the first quarter of 2023, Reata Pharmaceuticals, Inc. (NASDAQ:RETA) reported revenue of $195,000, which beat analysts’ estimates by $0.02 million. The company’s cash and cash equivalents at the end of March 2023 amounted to $321 million. Its research and development expenses stood at over $55.5 million.
As of the close of Q1 2023, 31 hedge funds owned stakes in Reata Pharmaceuticals, Inc. (NASDAQ:RETA), up from 24 in the previous quarter, as per Insider Monkey’s database. These stakes have a consolidated value of over $544.5 million. Billionaire Steve Cohen’s Point72 Asset Management was one of the company’s leading stakeholders in Q1.
6. Bruker Corporation (NASDAQ:BRKR)
Number of Billionaire Investors: 13
Number of Hedge Fund Holders: 27
Bruker Corporation (NASDAQ:BRKR) is an American manufacturer of scientific instruments used for molecular and materials research. The company’s products are also used for industrial and applied analysis.
Bruker Corporation (NASDAQ:BRKR) attracted positive analysts’ ratings after posting strong Q1 earnings. In May, both UBS and Citigroup raised their price targets on the stock to $98 and $95, respectively. UBS also gave a Buy rating to the stock.
Bruker Corporation (NASDAQ:BRKR) is also a dividend payer. On May 30, the company declared a quarterly dividend of $0.06 per share, having raised it by 20% from its previous dividend. The stock’s dividend yield on June 8 came in at 0.26%. Unlike Chevron Corporation (NYSE:CVX), Medtronic plc (NYSE:MDT), and The Coca-Cola Company (NYSE:KO), BRKR is one of the under-the-radar stocks billionaires are piling into.
In the first quarter of 2023, Bruker Corporation (NASDAQ:BRKR) reported revenue of $685.3 million, up 15.2% from the same period last year. The company had roughly $600 million in cash and cash equivalents. It generated $87.5 million in operating cash flow during the quarter, compared with $77.8 million in the prior-year period.
At the end of March 2023, 27 hedge funds tracked by Insider Monkey reported having stakes in Bruker Corporation (NASDAQ:BRKR), worth over $374 million collectively. With over 1.3 million shares, billionaire Ken Griffin’s Citadel Investment Group was the company’s largest stakeholder in Q1.
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Disclosure. None. 10 Under-the-Radar Stocks Billionaires Are Loading Up On is originally published on Insider Monkey.
