Hedge Fund Manager Louis Bacon’s Top 12 Stock Picks

Published on October 26, 2023 at 6:39 am by Ruchi Gupta in Hedge Funds, News

In this article, we discuss hedge fund manager Louis Bacon’s top 12 stock picks. You can skip our detailed analysis of Bacon’s hedge fund and its performance over the years and go directly to read Hedge Fund Manager Louis Bacon’s Top 5 Stock Picks.

Louis Bacon earlier this year scored a big legal victory after a New York Judge awarded him $203 million in damages in a defamation case against Canadian fashion Mogul Peter Nygard. While the record award continues to make waves, the billionaire investor is also best known for his investing skills as one of the most revered hedge fund managers.

A graduate of Middlebury College in Virginia, Bacon is unlike most hedge fund managers, having studied English Literature. He launched his investment career after graduating in 1979 and working at brokerage firm Walter Franck during the summer. It was after graduating with a Master’s in Business Administration that Bacon would start trading commodities.

Bacon shone to prominence after setting up an investment firm in 1987 that would go on to profit from the infamous Black Monday market crash. The formation of Moore Capital Management in 1989 with a $25,000 inheritance would cement Bacon’s status as one of the most prominent hedge fund managers. The hedge fund stood out by generating a 17.6% annualized return through 2019, racking significant returns for the legendary investor and his clients.

Louis Bacon’s impressive returns stem from an investment strategy focused on diversifying investments across several securities and sectors. Moore Capital Management invests in cash, futures, and derivatives to analyze macro trends from inflation to central bank policies and economic growth.

While Bacon has stepped down from active hedge fund management, he still works with portfolio managers and research teams to analyze the markets and uncover ground-breaking opportunities. Likewise, hedge fund manager Louis Bacon’s top stock picks are in the technology sector.

His portfolio includes exposure to NVIDIA Corporation (NASDAQ:NVDA), Amazon.com, Inc. (NASDAQ:AMZN), Microsoft Corporation (NASDAQ:MSFT), and Meta Platforms, Inc. (NASDAQ:META). In addition, the hedge fund manager boasts significant exposure in the financial and services sectors with stakes in Ally Financial Inc. (NYSE:ALLY) and Capital One Financial Corporation (NYSE:COF).

In addition to investing in some of the biggest and fastest-growing companies, Bacon has also made a name for himself as a trader in the options markets. He leverages puts and call options to pursue high-risk market reward opportunities. In the options market, the legendary investor mainly focuses on exchange-traded funds, given their diversified portfolios.

Hedge Fund Manager Louis Bacon's Top 12 Stock Picks

Louis Bacon Moore of Moore Capital

For instance, Bacon has exposure to the iShares 7 to 10-year ETF that seeks to track the investment results of an index that comprises US treasury bonds. While leveraging the Call option, the hedge fund manager tries to profit from the ETF price increasing over a defined period until expiry. Likewise, the strategy allows the hedge fund manager to benefit from rising treasury and bond prices.

Moore Capital Management has also taken a Put option on the Spdr S & P 500 ETF Trust (SPY) ETF. The investment signals that the hedge fund remains bearish on the S&P 500 as the ETF tries to mimic the results for the S&P 500.

Our Methodology

We analyzed Moore Capital Management’s Q2 2023 filings and picked the fund’s top holdings.

Hedge Fund Manager Louis Bacon’s Top Stock Picks

12. Digital Realty Trust, Inc. (NYSE:DLR)

Moore Capital Management Q2 2023 Holdings: $59.85 Million

Number of Hedge Fund Holders: 29

Digital Realty Trust, Inc. (NYSE:DLR) is a stock to buy, according to billionaire Louis Bacon, to take advantage of the booming real estate sector. The company supports leading enterprises and service providers by offering a full spectrum of the data center, colocation, and interconnection solutions. Operating as a REIT, it serves over 300 data centers across 25 countries.

As one of the largest data center providers, some of its big customers include IBM, Oracle, Meta platforms, JPMorgan, and Verizon. A boom in artificial intelligence has triggered a strong demand for data centers to handle the troves of data used to enable AI innovation. A leading data center platform provider where companies’ technology and data come together, Digital Realty Trust, Inc. (NYSE:DLR) is well-positioned to benefit from the AI revolution.

At the end of the second quarter, our database included 29 hedge funds holding positions in Digital Realty Trust Inc (NYSE:DLR), as compared to 25 funds in the first quarter. The most substantial stakeholder in the company was Citadel Investment Group, possessing 4.61 million shares valued at $525.23 million.

11. ServiceNow, Inc. (NYSE:NOW)

Moore Capital Management Q2 2023 Holdings: $60.30 Million

Number of Hedge Fund Holders: 93

ServiceNow, Inc. (NYSE:NOW) is one of the stocks to buy, according to billionaire Louis Bacon, for anyone eyeing exposure in the technology sector. The company has carved a niche in providing enterprise cloud computing solutions that define structures, consolidating and automating enterprise services.

A push into AI software, with the company seeing “unprecedented demand” for its organic innovation, has strengthened ServiceNow, Inc. (NYSE:NOW) sentiments in the market. As the company sees significant productivity increases with generative AI solutions, it continues to deliver impressive results that affirm underlying growth.

For starters, ServiceNow, Inc. (NYSE:NOW) delivered a net profit of $1.04 billion in Q2 with EPS of $2.37, above the $2.05 that Wall Street expected. Revenue was up 23% to $2.15 billion.

In the second quarter, a total of 93 hedge funds held long positions in ServiceNow, Inc. (NYSE:NOW), collectively accounting for a stake valued at $3.9 billion. The largest stakeholder among them was Rajiv Jain’s GQG Partners, with a holding of 1.53 million shares worth approximately $859.46 million in the company.

10. Shoals Technologies Group, Inc. (NASDAQ:SHLS)

Moore Capital Management Q2 2023 Holdings: $61.28 Million

Number of Hedge Fund Holders: 24

Amid the electric vehicle revolution and a push into clean energy, Bacon relies on Shoals Technologies Group, Inc. (NASDAQ:SHLS) for exposure in the market segment. The company is best known for providing an electrical balance of system solutions and components in solar, battery energy, and electric vehicle charging systems.

Shoals Technologies Group, Inc. (NASDAQ:SHLS) produces EBOS components, including cable assemblies, inline fuses, and wireless monitoring systems. The company streamlines the assembly and installation of large solar projects. Shoal Technologies has raised full-year revenue guidance to between $480 million and $510 million from a previous guidance of $470M and $510M. The increase affirms expected growth as it is above consensus estimates of $491.84 million.

In the second quarter of 2023, Insider Monkey’s database reveals that there were 24 hedge funds with a positive outlook on Shoals Technologies Group, Inc. (NASDAQ:SHLS). Notably, Todd J. Kantor’s Encompass Capital Advisors maintained the most substantial position in the company, holding approximately 4.1 million shares with an estimated value of around $104.95 million. This suggests a significant level of confidence from Encompass Capital Advisors in Shoals Technologies Group, Inc. (NASDAQ:SHLS) during that quarter.

9. Ally Financial Inc. (NYSE:ALLY)

Moore Capital Management Q2 2023 Holdings: $63.26 Million

Number of Hedge Fund Holders: 46

Based in Detroit, Michigan, Ally Financial Inc. (NYSE:ALLY) stands out as one of the stocks to buy, according to billionaire Louis Bacon, for exposure in the financial services sector.

The company offers various digital financial products and services. Ally Financial Inc. (NYSE:ALLY) primarily operates through Automotive Finance Operations, Insurance Operations, Mortgage Finance Operations, and Corporate Finance Operations segments.

The financial services company has embarked on a restructuring drive to reinvigorate its fortune and better navigate inflation and high-interest rates. Consequently, it is trimming 5% of its workforce.

In the second quarter database from Insider Monkey, 46 hedge funds expressed a positive sentiment toward Ally Financial Inc. (NYSE:ALLY), a slight decrease from the 48 hedge funds in the previous quarter. Warren Buffett’s Berkshire Hathaway maintained the largest position in the company, holding 29 million shares valued at $783.3 million.

8. Teck Resources Ltd (USA) (NYSE:TCK)

Moore Capital Management Q2 2023 Holdings: $65.79 Million

Number of Hedge Fund Holders: 79

Teck Resources Ltd (USA) (NYSE:TCK) is one of hedge fund manager Louis Bacon’s top stock picks in the basic materials segment. The company offers solid exposure to some of the most sought-after industrial metals as it operates Steelmaking, Coal, Copper, Zinc, and Energy segments. Teck Resources Ltd (USA) (NYSE:TCK) also produces lead, silver molybdenum, and other specialty metals.

While Teck Resources Ltd (USA) (NYSE:TCK) is flat for the year, it is up by more than 300% over the past three years, affirming why it is one of the stocks to buy, according to billionaire Louis Bacon, for solid exposure in the mining industry. The outperformance stems from strong demand for industrial metals with the opening of the global economy.

During the second quarter of 2023, 79 out of the 910 hedge funds polled by Insider Monkey had held a stake in the company. Out of these, Eric W. Mandelblatt’s Soroban Capital Partners is Teck Resources Ltd (USA) (NYSE:TCK)’s largest investor. It owns 10.06 million shares that are worth $423.61 million.

7. Capital One Financial Corporation (NYSE:COF)

Moore Capital Management Q2 2023 Holdings: $66.37 Million

Number of Hedge Fund Holders: 51

Capital One Financial Corporation (NYSE: COF) is a financial services institution specializing in banking, credit cards, and loans.

While it has been a challenging year for finance stocks as high interest rates make it difficult to hold onto deposits, Capital One Financial Corporation (NYSE:COF) has steadied. As one of the largest credit card issuers, it remains well-positioned to benefit from a growing economy and increased consumer spending.

Early this year, legendary investor Warren Buffett placed a $945 million bet on the company, affirming why it is one of the best stocks to buy, according to billionaire Louis Bacon. Capital One Financial Corporation (NYSE:COF) is currently valued below its book value after a deep pullback, making it an ideal choice for value-focused investors.

In Q2 2023, among the 910 hedge funds surveyed by Insider Monkey, 51 had positions in Capital One Financial Corporation (NYSE:COF). The most significant stake in Capital One Financial Corporation (NYSE:COF) within our database is held by Natixis Global Asset Management’s

Harris Associates, possessing 19.09 million shares valued at $2.09 billion.

6. Workday, Inc. (NASDAQ:WDAY)

Moore Capital Management Q2 2023 Holdings: $82.53 Million

Number of Hedge Fund Holders: 71

Workday, Inc. (NASDAQ:WDAY) is another stock in Moore Capital Management’s portfolio for exposure in the burgeoning cloud computing sector. The company offers cloud applications that help customers plan, execute, analyze, and extend to other applications and environments. It provides a financial management application suite that enables users to maintain accounting information.

While Workday, Inc. (NASDAQ:WDAY) is up by about 35% year to date, it remains one of hedge fund manager Louis Bacon’s top stock picks owing to its long-term prospects. Its cloud applications are in high demand amid the digital revolution, allowing enterprises to manage resources across large and complex organizations. It posted a 16% increase in revenue in the most recent quarter, signaling underlying growth.

According to Insider Monkey’s research, Workday, Inc. (NASDAQ:WDAY) had 71 hedge funds as shareholders in Q2 2023. The biggest stakeholder was Viking Global, run by Andreas Halvorsen, with a stake of 3 million shares valued at $686 million.

Click to continue reading and see Hedge Fund Manager Louis Bacon’s Top 5 Stock Picks.