In this article, we will take a look at the 5 best defensive stocks to buy now. To see more such companies, go directly to 13 Best Defensive Stocks To Buy Now.
5. Walmart Inc. (NYSE:WMT)
Number of Hedge Fund Holders: 91
You will hardly find any list of best defensive stocks to buy without mention of Walmart Inc. (NYSE:WMT), the biggest retailer in the US which remains a behemoth irrespective of the economic conditions.
As of the end of the first quarter of 2023, 91 hedge funds out of the 943 funds tracked by Insider Monkey reported owning stakes in Walmart Inc. (NYSE:WMT). The most significant stakeholder of Walmart Inc. (NYSE:WMT) during this period was D E Shaw with a $710 million stake in the company.
In July, it was reported that Walmart Inc. (NYSE:WMT) paid about $1.4 billion to up its stake in Indian e-commerce company Flipkart.
Here is what Leaven Partners has to say about Walmart Inc. (NYSE:WMT) in its Q3 2022 investor letter:
“In our last quarterly letter, I briefly mentioned that the consensus estimates for corporate profits appeared to be a bit too sanguine. I referenced a Reuters article that reported, as of June 17, Wall Street expected S&P 500 earnings to grow by 9.6% in 2022, which was up from 8.8% in April and from 8.4% in January. That tune began to change at the end of July and accelerated in August and September, as major players, such as Walmart (NYSE:WMT), has recently issued profit warnings and/or have withdrawn guidance. In response, Wall Street has altered its outlook: lowering third-quarter profit growth to 4.6%[2] from 7.2% in early August and slashing full-year profit growth to 4.5%.”
4. Thermo Fisher Scientific Inc. (NYSE:TMO)
Number of Hedge Fund Holders: 98
Thermo Fisher Scientific Inc (NYSE:TMO) ranks 4th in our list of the best defensive stocks to buy now according to hedge funds. Thermo Fisher Scientific Inc (NYSE:TMO) in July posted weak Q2 results and revised its full-year guidance that missed analyst consensus. This development came in the wake of the global macroeconomic situation. Thermo Fisher Scientific Inc (NYSE:TMO) is still a major player in the industry and analysts believe the stock has solid growth potential. According to Yahoo Finance data, Thermo Fisher Scientific Inc (NYSE:TMO)’s one-year price estimate (average) set by Wall Street analysts is $627.
Weitz Partners III Opportunity Fund made the following comment about Thermo Fisher Scientific Inc. (NYSE:TMO) in its second quarter 2023 investor letter:
“Portfolio activity this quarter included opportunistically initiating a position in life sciences tool and equipment maker Thermo Fisher Scientific Inc. (NYSE:TMO), a long-time holding of other Weitz portfolios, at an attractive valuation.”
3. UnitedHealth Group Incorporated (NYSE:UNH)
Number of Hedge Fund Holders: 116
Healthcare stocks are considered recession-proof and safe. UnitedHealth Group Incorporated (NYSE:UNH) is a big company, with a market cap of over $470 billion as of August 14. UnitedHealth Group Incorporated (NYSE:UNH) has been paying consistent dividend for years and its business model is safe and thriving. That’s why it’s one of the top defensive choice of hedge fund investors.
As of the end of the first quarter of 2023, 116 hedge funds out of the 943 funds tracked by Insider Monkey reported owning stakes in UnitedHealth Group Incorporated (NYSE:UNH). The biggest stakeholder of UnitedHealth Group Incorporated (NYSE:UNH) during this period was Rajiv Jain’s GQG Partners which owns a $2.3 billion stake in the company.
L1 Capital International Fund made the following comment about UnitedHealth Group Incorporated (NYSE:UNH) in its second quarter 2023 investor letter:
“Close observers of the Fund will note the increased exposure to healthcare, currently 13% of the portfolio. Healthcare is generally less macro-sensitive than some other sectors. In a reversal of market sentiment compared to 2022, the healthcare sector has been under modest pressure due to what we consider to be some short-term transitory issues, while technology, particularly anything to do with AI, has become the market’s dish du jour. We have been selectively increasing our investment in a few very high-quality healthcare businesses at prices we consider to be fair. UnitedHealth Group Incorporated (NYSE:UNH) is now a top 10 holding, and our investment thesis is outlined in this report.
We have previously written on our exposure to taxes through our investment in Intuit and its market leading TurboTax franchise (Intuit also owns the QuickBooks small business accounting franchise, Credit Karma and Mailchimp). UnitedHealth Group (UnitedHealth) is leading the charge to postpone the inevitable, while lowering overall healthcare system costs.
U.S. health spending has outpaced GDP growth for decades, with spending on healthcare increasing from around 12% of GDP in the 1980s to nearly 20% today, driven by advancements in healthcare capabilities and an ageing population with increased life expectancy…” (Click here to read the full text)
2. Mastercard Incorporated (NYSE:MA)
Number of Hedge Fund Holders: 138
Mastercard Incorporated (NYSE:MA) is a notable stock in Invesco’s Defensive ETF. As of the end of the first quarter of 2023, 138 hedge funds out of the 943 funds tracked by Insider Monkey had stakes in Mastercard Incorporated (NYSE:MA). The biggest stakeholder of Mastercard Incorporated (NYSE:MA) during this period was Charles Akre’s Akre Capital Management which owns a $2.13 billion stake in the company.
Mastercard Incorporated (NYSE:MA) posted strong Q2 results in July, driven by a huge growth in travel demand around the world.
1. Visa Inc. (NYSE:V)
Number of Hedge Fund Holders: 173
Visa Inc. (NYSE:V) is one of the best defensive stocks to buy now according to hedge funds. Visa Inc. (NYSE:V) dominates the payments industry which continues to thrive even in the midst of recession as companies, vendors and customers have to process their payments and carry out basic transactions irrespective of the economic conditions. With several years of consistent dividend increases, Visa Inc. (NYSE:V) is a solid choice for risk-averse investors.
As of the end of the first quarter of 2023, 173 hedge funds out of the 943 funds tracked by Insider Monkey were long Visa Inc. (NYSE:V).
Manole Capital Management made the following comment about Visa Inc. (NYSE:V) in its second quarter 2023 investor letter:
“We like to start out all of our discussions by telling investors who we are. We are FINTECH investors, and we define Fintech as “anything utilizing technology to improve an established process.” We realize that half of Fintech is financial, but we don’t invest in traditional, credit sensitive banks. Having managed money during the Financial Crisis, we learned firsthand how certain opaque and balance sheet intensive financials could go bankrupt or insolvent.
We prefer transaction-based businesses, generating recurring revenue, with sustainable margins, and significant cash flow. From our perspective, the perfect example of a FINTECH business is the secularly growing payments industry. Names like Visa Inc. (NYSE:V) or Mastercard, that generate revenue and profit per swipe or transaction, without the underlying credit sensitivity or risk associated with that underlying line of credit.”
You can also take a peek at 10 Best Consumer Staples ETFs and 10 Korean Stocks Listed in the U.S.
