Below are the 5 best stocks to buy now according to quant billionaires. These stocks are some of the top picks of quant hedge fund Two Sigma run by quant billionaires John Overdeck and David Siegel. For a comprehensive list and Two Sigma’s performance please see 10 Best Stocks To Buy Now According To Quant Billionaires.
5. Visa, Inc. (NYSE: V)
Two Sigma Advisors has been holding a stake in Visa (NYSE: V) since 2016. The firm increased its position in the payment technology company by 24% in the December quarter to 1.95 million shares. Visa stock price recovered strongly during the second half of 2020, but its shares are struggling to sustain those gains in 2021.
Visa has seen an increase in hedge fund sentiment in recent months. It was in 166 hedge funds’ portfolios at the end of the fourth quarter of 2020 compared to the all-time high for this statistic of 160. This means the bullish number of hedge fund positions in this stock currently sits at its all-time high. There were 160 hedge funds in our database with V holdings at the end of September.
4. Amazon.com (NASDAQ: AMZN)
The e-commerce platform Amazon.com (NASDAQ: AMZN) is among the 10 best stocks to buy now according to quant billionaires. Two Sigma increased its position by 83% in Visa during the December quarter to 131,911 shares. However, Amazon’s stock price underperformed during the first quarter of this year due to a broader correction in tech stock prices.
Mairs & Power, an investment management firm, stated in a Q4 investor letter that Amazon’s rising margins and advertising business are among the catalysts. Here is what Mairs & Power stated:
“We did acquire AMZN in the fourth quarter. But not owning it till then cost the Fund in performance relative to the S&P 500 TR Index. We had held off taking a position in Amazon largely due to concerns about the company’s slim margins. But in 2020, we saw its core margins nearly double as more consumers shopped online, which in turn led to greater utilization and route density within Amazon’s delivery network. In addition, Amazon’s advertising business, which represents a small portion of its overall sales, has been growing quickly. Advertising could become the third leg of growth for the company along with e-commerce and Amazon Web Services. In short, Amazon checks all of our boxes — it has a strong management team, great growth prospects, and a strong competitive advantage. And last year, we initiated our position at an intriguing valuation.”
3. Cisco Systems Inc. (NASDAQ: CSCO)
Cisco Systems is also a long-running investment of Two Sigma Advisors. The firm first initiated a position in Cisco in 2013. It is currently the third-largest stock holding of the quant fund Two Sigma. Shares of Cisco Systems grew 15% year to date amid prospects for sales growth on economic reopening. Hedge funds are showing confidence in Cisco’s fundamentals. Cisco Systems was in 60 hedge funds’ portfolios at the end of the fourth quarter of 2020. The all-time high for this statistic is 68.
2. Facebook, Inc. (NASDAQ: FB)
Two Sigma Advisors increased the stake in Facebook Inc (NASDAQ: FB) by 124% during the December quarter to 1.7 million shares. It is ranked second in the list of 10 best stocks to buy now according to quant billionaires. The firm first initiated a position in FB in 2013. The Facebook share price has been struggling this year after generating robust gains in 2020.
Kinsman Oak Capital Partners Inc., an independent Toronto-based boutique investment firm, highlighted a few stocks including Facebook in their Q4 investor letter. Here’s what Kinsman Oak Capital Partners stated:
“Our view on Facebook (FB) may be somewhat controversial. The bear case for FB boils down to antitrust risk and valuation. Facebook, although to a lesser degree, is a relative value bargain as well. We believe the company possesses an element of platform risk that Alphabet does not but, compared to the rest of the market, the stock still seems undervalued. We compared Facebook to the Russell 2000, an index full of cyclical businesses that are considered no-brainers at the beginning of a recovery and popular re-opening stocks that are poised to go higher after the vaccine is distributed (Appendix E). Facebook is significantly cheaper, growing faster, has a larger economic moat, superior margin profile, and requires less capex.”
1. Microsoft Corporation (NASDAQ: MSFT)
The quant hedge fund held more than 3 million shares of Microsoft Corporation (NASDAQ: MSFT) at the end of the fourth quarter of 2020, representing 1.82% of the overall portfolio. Shares of MSFT extended the upside momentum into 2021 on the back of sharp financial growth projections. The tech giant also offers hefty dividends to investors.
Bretton Fund, which returned 11.52% for the fourth quarter, highlighted a few stocks including Microsoft in the Q4 investor letter. Here is what Bretton Fund stated:
“Microsoft’s stock also had a great year, returning 42.4% on increased earnings per share of 30%. The main driver of their growth in recent years is their cloud computing business, and while it did see a bump in demand as office workers went remote, most of the growth is from the continued shift of corporate computing systems to “the cloud.” We think this shift is still in its early stages.”
You can also take a peek at 10 Best Small-Cap Biotech Stocks Under $10 in 2021 and 10 Best Silver Stocks To Buy.
