5 Best Wide Moat Stocks to Buy According to Hedge Funds

1. Microsoft Corporation (NASDAQ:MSFT)

Number of Hedge Fund Holders: 269

Even after multiple decades and the entry of free competitors like Linux, Microsoft Corporation (NASDAQ:MSFT)’s Windows still dominates the desktop PC operating system market with 76.33% market share as of June 2022 given its powerful network effects. Because Windows is the most used desktop operating system, more useful apps are built for Windows than for any other operating system. As a result, most buyers want a Windows desktop operating system even if it costs more than Linux.

Similarly, Microsoft Corporation (NASDAQ:MSFT) has a wide moat given its Microsoft Office productivity software, and the company is also growing in the cloud.

With 269 hedge funds owning shares of Microsoft Corporation (NASDAQ:MSFT) at the end of Q3, the stock ranks #1 on our list of 12 Best Wide Moat Stocks to Buy According to Hedge Funds.

Baron Funds commented on Microsoft Corporation (NASDAQ:MSFT) in a Q3 2022 investor letter,

Shares of Microsoft Corporation (NASDAQ:MSFT) pulled back with the overall software industry on the back of macroeconomic issues, including inflation concerns and rising interest rates. The company reported another strong quarter, highlighted by total revenues growing 16% on a constant currency basis and Microsoft Cloud revenues, now 48% of total sales, growing 33%, with Azure (Microsoft’s infrastructure cloud) growing 46%. These results were driven by strong demand for large commercial cloud contracts, as more businesses are standardizing on Microsoft’s platform and the company is signing larger and longer deals. Initial fiscal year 2023 guidance calls for healthy double-digit revenue and operating income growth. Both foreign exchange and personal computer headwinds were contemplated in the guidance and have continued to worsen, but we have conviction in the company’s strong competitive positioning, durable growth drivers, and margin expansion opportunity over the mid- to long term.

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