In this article we discuss the 5 undervalued blue chip stocks hedge funds are piling into. If you want to read our detailed analysis of these stocks, go directly to the 10 Undervalued Blue Chip Stocks Hedge Funds Are Piling Into.
5. The Goldman Sachs Group, Inc. (NYSE: GS)
Number of Hedge Fund Holders: 77
Forward PE Ratio: 8.62
The Goldman Sachs Group, Inc. (NYSE: GS) is a New York-based financial services company founded in 1869. It is ranked fifth on our list of 10 undervalued blue chip stocks hedge funds are piling into. The stock has returned 42% to investors in the past year. The bank offers various wealth management services and is often a prime broker in mergers and acquisitions. It also offers banking services and market research. The firm markets financial planning, investment management, and a range of other services.
On June 9, The Goldman Sachs Group, Inc. (NYSE: GS) stock was given a Buy rating by investment advisory Jefferies with a price target of $450, implying an upside potential of 17% on the back of expected increase in revenue streams and better capital allocation in the coming weeks and months.
On June 1, news agency Reuters reported that The Goldman Sachs Group, Inc. (NYSE: GS) was preparing to increase real estate investments in Japan by 100%. The share price of the financial services jumped more than 2% after the news report was published.
Out of the hedge funds being tracked by Insider Monkey, New York-based investment firm Eagle Capital Management is a leading shareholder in the firm with 4.7 million shares worth more than $1.5 billion.
In its Q1 2021 investor letter, Artisan Partners, an asset management firm, highlighted a few stocks and The Goldman Sachs Group, Inc. (NYSE: GS) was one of them. Here is what the fund said:
“Financial services firm Goldman Sachs is a best-in-class franchise with a premier brand that attracts top talent and sustains market share across its businesses. We believe this has helped Goldman weather recent market volatility. In addition to de-levering risk-weighted assets, Goldman is also growing its digital investment footprint through the expansion of features on its Marcus Invest platform. The company’s stability—and ability to grow its brand even in tough times—has kept us invested over the long term.”
4. General Motors Company (NYSE: GM)
Number of Hedge Fund Holders: 86
Forward PE Ratio: 11.04
General Motors Company (NYSE: GM) is a Michigan-based company that makes and sells cars. It was founded in 1908 and is placed fourth on our list of 10 undervalued blue chip stocks hedge funds are piling into. The company’s shares have returned 119% to investors in the past year. In addition to vehicles, the company also sells financial services related to their purchase and maintenance. It is one of the largest and oldest automakers in the American market, selling cars, trucks, crossovers, and other related items.
On June 8, General Motors Company (NYSE: GM) was named among the top auto picks of investment advisory Morgan Stanley on the back of the expected release of several electric vehicle cars in the coming months.
On June 4, Bank of America maintained a Buy rating on General Motors Company (NYSE: GM) stock with a price target of $80 on the back of confidence in the firm to deal with an auto chip shortage in the car industry better than rivals.
Out of the hedge funds being tracked by Insider Monkey, Nebraska-based investment firm Berkshire Hathaway is a leading shareholder in General Motors Company (NYSE: GM) with 67 million shares worth more than $3.8 billion.
Junto Investments, in its Q4 2020 investor letter, mentioned General Motors Company (NYSE: GM). Here is what the fund has to say about General Motors Company in its letter:
“General Motors was the biggest gainer. We managed to buy it at a screamingly cheap price in the middle of March. A lot of interesting news has emerged about GM recently, including the new electric product delivery system BrightDrop and GM Cruise’s team-up with Microsoft Azure to commercialize self-driving cars in 2021. GM’s intrinsic value is crystallizing and the company is worth a whole lot more than is still reflected in the market.”
3. Baidu, Inc. (NASDAQ: BIDU)
Number of Hedge Fund Holders: 89
Forward PE Ratio: 19.4
Baidu, Inc. (NASDAQ: BIDU) is a Chinese technology company founded in 2000. It is placed third on our list of 10 undervalued blue chip stocks hedge funds are piling into. The stock has offered investors returns exceeding 61% over the course of the past twelve months. Baidu has interests in several internet-related businesses in China, including the search engine market, artificial intelligence, mobile ecosystem, self-driving cars, and others. The company is one of the most popular foreign equities on the US market.
In quarterly earnings results for the first three months of 2021, posted on May 18, Baidu, Inc. (NASDAQ: BIDU) reported earnings per share of RMB12.38, easily beating market predictions by RMB1.63. The revenue for the first quarter was over RMB28 billion, up close to 25% year-on-year.
On April 29, Baidu, Inc. (NASDAQ: BIDU) had announced that it would be launching a driverless robotaxi service, called Apollo Go Robotaxi, at a venue in China ahead of the Beijing Winter Olympics scheduled for 2022.
At the end of the first quarter of 2021, 89 hedge funds in the database of Insider Monkey held stakes worth $6.5 billion in Baidu, Inc. (NASDAQ: BIDU), up from 51 in the preceding quarter worth $4.6 billion.
In its Q1 2021 investor letter, Horos Asset Management, an asset management firm, highlighted a few stocks and Baidu, Inc. (NASDAQ: BIDU) was one of them. Here is what the fund said:
“We have also fully exited our stake in Baidu, following their outstanding performance during the period and their lower relative upside potential compared to other investment alternatives, which we will discuss below.
The Chinese technology platform company Baidu has also been held in the portfolios managed by Alejandro, Miguel and myself for several years. During this period, we have seen very high volatility in its share price, which we have taken advantage of to make significant rebalancing moves in our position (in fact, we even sold our entire position once, when we thought the stock’s upside potential was exhausted). After several years of instability, market sentiment turned very positive, putting an end to the historical advertising problems in the healthcare sector, the divestments in O2O (Online-to-Offline) businesses that continued to weigh on the company’s margins, the IPO of part of the iQiyi streaming business (which hid Baidu’s underlying cash generation capacity) and the tough competition from other industry giants such as Tencent and Alibaba, as well as the entry of new players with disruptive business models (ByteDance). At the same time, the company’s recent commitment to electric vehicles contributed even more to this change of narrative. Baidu’s share price rose almost fourfold from the March 2020 lows to all-time highs and reached a valuation where the margin of safety, in our view, was too narrow.”
2. Citigroup Inc. (NYSE: C)
Number of Hedge Fund Holders: 90
Forward PE Ratio: 8.6
Citigroup Inc. (NYSE: C) is a New York-based investment banking company founded in 1812. It is placed second on our list of 10 undervalued blue chip stocks hedge funds are piling into. The company’s shares have returned 46% to investors in the past twelve months. It is one of the largest investment services in the world with operations in Europe, Africa, Asia, and Latin America, in addition to North America. The company has a separate consumer banking unit to offer traditional banking services.
On May 7, a report in the Financial Times stated that Citigroup Inc. (NYSE: C) was planning to offer clients cryptocurrency services as interest in digital offerings was exploding across the world. The firm was considering trading, financing, and custody related to crypto, the report claimed.
On April 26, Citigroup Inc. (NYSE: C) announced that it would continue to invest in digital mortgage capabilities as part of a plan to expand outreach to communities of all types.
At the end of the first quarter of 2021, 90 hedge funds in the database of Insider Monkey held stakes worth $6.9 billion in Citigroup Inc. (NYSE: C), down from 95 the preceding quarter worth $7.1 billion.
In its Q1 2021 investor letter, Artisan Partners Limited Partnership, an asset management firm, highlighted a few stocks and Citigroup Inc. (NYSE: C) was one of them. Here is what the fund said:
“We fully exited position in Citigroup. Global financial services company Citigroup made a $900 million clerical error and received a public reprimand from federal regulators. This, after a decade focused on process control, information technology and risk systems, makes the error substantially more costly than just the $900 million mistake. Regulators believe the company’s risk management improvements have fallen short of expectations. To rectify the situation, a process and technology spending surge could negatively affect 2021-2022 profits by 10% to 20%. Trust and confidence are important in large financial institutions, and this incident combined with the CEO’s sudden retirement shook ours.”
1. Berkshire Hathaway Inc. (NYSE: BRK-A)
Number of Hedge Fund Holders: 111
Forward PE Ratio: 25.03
Berkshire Hathaway Inc. (NYSE: BRK-A) is a Nebraska-based holding company founded in 1839. It is ranked first on our list of 10 undervalued blue chip stocks hedge funds are piling into. The stock has returned 58% to investors in the past year. The company is led by legendary investor Warren Buffett and has stakes in several large corporations. It is one of the largest firms in the world in terms of market capitalization, and one of the two non-tech stocks in the top 8 companies on the S&P 500 Index.
On June 8, The Wall Street Journal reported that Berkshire Hathaway Inc. (NYSE: BRK-A) was acquiring a stake in Nu Pagamentos SA, a Brazilian digital banking firm. The investment is reported to be worth $500 million and represents one of the first forays of Berkshire Hathaway into the world of fintech.
At the end of the first quarter of 2021, 111 hedge funds in the database of Insider Monkey held stakes worth $19 billion in Berkshire Hathaway Inc. (NYSE: BRK-A), up from 110 in the preceding quarter worth $20 billion.
In its Q1 2021 investor letter, Vltava Fund, an asset management firm, highlighted a few stocks and Berkshire Hathaway Inc. (NYSE: BRK-A) was one of them. Here is what the fund said:
“Despite the considerable rise in stock markets over the past year, there are still many attractive opportunities. Human nature also is playing a bit into our hands. Investor crowds often chase popular stocks, hot IPOs, or mysterious SPACs and completely leave aside stocks they consider boring and not sexy enough. A typical example of this category is our long-term largest position in Berkshire Hathaway. Since we bought it for the first time, its price has nearly quadrupled and yet it remains just as undervalued today as it was at that time. Considering the current rate at which it is buying back its own shares and the amount of cash that Berkshire Hathaway has, my greatest wish as a shareholder is for the company’s share price to remain as low as possible for as long as possible.”
You can also take a peek at Billionaire Stan Druckenmiller’s Top 10 Stock Picks and Billionaire Julian Robertson On Interest Rates and His Top Stock Picks For 2021.
