In this article, we will take a detailed look at 12 Best ADR Stocks to Buy According to Hedge Funds.
American Depositary Receipts (ADR) are US-listed securities that represent shares in foreign companies, allowing American investors to gain exposure to international equities without dealing with foreign exchanges or currencies. Unlike regular shares of domestic companies, ADRs are issued by US banks and trade on American exchanges, typically in US dollars. While they provide easier access to foreign markets, ADRs can carry additional risks such as currency fluctuations, geopolitical factors, and differences in accounting standards or regulatory environments. Investors should also note that ADRs come in two forms: sponsored and unsponsored. Sponsored ADRs are issued in partnership with the foreign company and typically offer more reliable financial reporting and investor communication. Unsponsored ADRs, on the other hand, are created without the company’s direct involvement and may have limited information available, making due diligence more challenging.
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ADRs were not particularly popular in the last 15 years, as the US stock market has been the best-performing developed market since the 2008 financial crisis, significantly and consistently outperforming all major European markets as well as the Chinese stock market. The US stock market has massively benefited from the US’s technological leadership and the emergence of tech giants with multi-trillion-dollar capitalizations, a more favorable business environment with lower tax rates, more aggressive financial stimulus, and, more importantly, significantly higher productivity growth vs. other regions. As a result, the US stock markets not only delivered higher earnings growth but also experienced the largest increase in valuations compared to Europe and China. The latter is partially attributed to foreign capital flowing into the US market as investors recognized the superior growth opportunities of US companies.
The recent political developments initiated by the Trump 2.0 regime have set the stage for a potential reversal of the aforementioned trends, which may drive relative outperformance of foreign markets and make ADRs attractive again. First, the Trump 2.0 tariff turmoil and massive cuts in federal spending are likely to cause an economic slowdown and thus cut the earnings growth potential of domestic companies. Second, the threat of tariffs imposed on the USA’s allies is already causing retaliatory measures, including the potential substitution of American products for European or Canadian alternatives (again, this endangers the earnings growth potential of US domestic companies while boosting the potential of European and Canadian companies). Third, Europe has recognized that the US has become a less reliable partner, as evidenced by the major shift in policies of the new administration, and is already taking steps to ensure its independence and minimize dependence on the US. This is illustrated by the recent decision of Germany to create a €500 billion infrastructure fund to boost its defense capabilities (funds which are planned to be spent primarily on European contractors). Last but not least, the increasing tensions between the Western allies could potentially drive a return of European capital to the European continent, which may cause a relative valuation repricing in favor of the European stock market.
With that being said, the key takeaway for readers is that the current developments in the US and Europe suggest a potential break of the trend in which the US strongly outperformed Europe and China for the last 15 years. In this context, gaining more international exposure through ADRs could be a great way to not only hedge domestic risk but also gain exposure to new emerging tailwinds such as the accelerating European spending on defense. Both the European and Chinese stock markets have outperformed the US since election day, meaning that there is already strong confirmation for the developments discussed above.
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Our Methodology
For this article, we used a Finviz screener to filter all the available ADR stocks. Then we compare the list with our Q4 2024 proprietary database of hedge funds’ ownership and include in the article the top 12 stocks with the largest number of hedge funds that own the stock.
Why are we interested in the stocks that hedge funds pile into? The reason is simple: our research has shown that we can outperform the market by imitating the top stock picks of the best hedge funds. Our quarterly newsletter’s strategy selects 14 small-cap and large-cap stocks every quarter and has returned 373.4% since May 2014, beating its benchmark by 218 percentage points (see more details here).
12. GSK plc (NYSE:GSK)
Number of Hedge Fund Holders: 48
GSK plc (NYSE:GSK) is a UK-based global biopharmaceutical company focused on the research, development, and manufacturing of medicines and vaccines. Its operations are structured around three core therapeutic areas: infectious diseases, HIV, and immunology/respiratory. GSK is a world leader in vaccines and has a broad portfolio targeting diseases such as shingles, meningitis, and influenza. In pharmaceuticals, it develops treatments for conditions including asthma, lupus, and HIV.
GSK plc (NYSE:GSK) has several significant commercial developments planned for 2025, with BLENREP’s relaunch being the primary focus, followed by Nucala’s introduction into COPD and expanding Shingrix’s market reach. BLENREP’s relaunch is particularly notable with compelling data from the DREAMM-7 and DREAMM-8 programs, projecting a 33-month incremental survival benefit over daratumumab. The company plans a tiered introduction approach for BLENREP, initially targeting experienced healthcare providers before expanding to broader markets. In the vaccines segment, Shingrix maintains strong potential with 22 million eligible patients still untapped in the US, while the company implements new strategies focusing on physician education and targeting specific patient subgroups.
For RSV vaccines, GSK plc (NYSE:GSK) anticipates future developments with 36-month immune data presentation to ACIP in June, though revaccination and expanded population coverage are longer-term prospects. In oncology, while PARP inhibitors remain relatively static, Jemperli shows promising growth, particularly in endometrial cancer, where it splits the market evenly with Merck’s pembrolizumab. The company’s recent acquisition for gastrointestinal stromal tumors and developments in the B7-H3 program, including three breakthrough designations for small cell cancer, demonstrate GSK’s strategic focus on targeted therapies. With 48 hedge funds owning the stock, GSK is one of the best ADR stocks to buy.
11. HDFC Bank Limited (NYSE:HDB)
Number of Hedge Fund Holders: 50
HDFC Bank Limited (NYSE:HDB) is an India-based financial institution and one of the country’s largest private-sector banks. It offers a broad range of banking services, including retail banking, wholesale banking, treasury operations, and digital banking products. The bank provides loans, credit cards, savings and current accounts, and investment services to individuals and businesses. HDB has an extensive distribution network across urban and rural India, supported by digital platforms and mobile banking. It also engages in trade finance, cash management, and foreign exchange services. With 50 hedge funds owning the stock, HDB is one of the best ADR stocks to buy.
HDFC Bank Limited (NYSE:HDB) is operating in a challenging macro environment characterized by tight liquidity conditions, signs of moderating urban demand, tepid private capital expenditure, and volatility in the Indian rupee. Despite these challenges, the bank has shown positive momentum with robust growth in average deposits at 16% and continued market share gains. The bank has successfully normalized its credit deposit ratio, with deposit growth outpacing loan growth, achieving an AUM advance growth of 8% YoY. Net Interest Margins have remained stable despite headwinds from tight liquidity and the pricing environment. The bank has maintained strong credit parameters across segments, with slippages, gross NPA, and credit costs remaining resilient and stable, excluding some cyclical patterns in the agri sector.
On the operational front, HDFC Bank Limited (NYSE:HDB) has added over 1,000 branches while maintaining tight cost control with only 7% YoY cost growth. Looking forward, HDB is well-positioned with sufficient liquidity and capital, allowing it to capture market share when macro conditions stabilize. The bank’s strategy includes growing deposits faster than the system and maintaining a balanced approach to growth, in line with their committed glide path on the CD ratio. The management has outlined a growth trajectory where FY2025 will see growth lesser than the system, FY2026 will be in line with the system, and FY2027 will be faster than the system.
10. Trip.com Group Limited (NASDAQ:TCOM)
Number of Hedge Fund Holders: 51
Trip.com Group Limited (NASDAQ:TCOM) is a China-based global online travel services provider. The company operates several brands, including Trip.com, Ctrip, Skyscanner, and Qunar, offering a wide range of travel products such as hotel bookings, airline tickets, vacation packages, and corporate travel management. Its platforms support users with travel planning, price comparisons, and real-time booking services. TCOM serves both domestic and international travelers, with a strong presence in China and growing operations across Asia, Europe, and other global markets.
Trip.com Group Limited (NASDAQ:TCOM) demonstrated strong financial performance in Q4 2024, with net revenue growing 23% YoY to RMB 12.7 billion, while full-year revenue increased 20% to RMB 53.3 billion. The company’s core OTA businesses achieved a significant GMV of over RMB 1.2 trillion (USD 169 billion) in 2024. Outbound travel showed robust growth, with hotel and air ticket bookings recovering to more than 120% compared to 2019, outperforming the industry by 30% to 40%. The company’s international business demonstrated strong momentum, representing 14% of group revenue in Q4 and 10% in 2024, with air ticket and hotel bookings on the international OTA platform growing by over 70% YoY.
Trip.com Group Limited (NASDAQ:TCOM) has strengthened its global presence through strategic investments in technology and talent, operating 16 global call centers and employing thousands of travel professionals across 28 countries. The company’s commitment to AI innovation was evident through TripGenie, which saw significant growth with traffic surging by 200%, browsing time increasing by nearly 100%, and total conversations rising by 200%. Looking ahead, management announced enhanced capital return initiatives for 2025, including a share repurchase program of up to $400 million and a cash dividend totaling approximately $200 million. With 51 hedge funds owning the stock, TCOM is one of the best ADR stocks to buy.
