We recently compiled a list of the 12 Best Blue Chip Stocks To Invest In According to Short Sellers. In this article, we are going to take a look at where Berkshire Hathaway Inc. (NYSE:BRK-B) stands against the other blue chip stocks.
“Investors Need a Reason to Buy”
While economic data may be scarce, every data point gives a new angle to the ever-uncertain economic conditions in the US. On September 12, Jason Draho, UBS Global Wealth Management Head of Asset Allocation, appeared in an interview on Yahoo Finance to discuss the market moves after the consumer price index (CPI) report was released on Wednesday.
Draho suggested how regular intra-day moves did not hold enough weight to impact or influence the Fed’s decision. However, he did acknowledge that the inflation data and Wall Street’s reaction to it make the case for a 25-basis cut, or more, in the upcoming Fed meeting.
Draho then hinted that investors are hoping for a soft landing and are looking for stronger reasons or economic cues to hold back, given that bad economic news, as of now, has not triggered investors as much. He also emphasized the need for more financial data and clarity on whether the Fed would be proactive with its rate cuts for further analysis.
Contrary to what investors wish, he believes the Fed will be rather hawkish than proactive with its rate-cutting cycle. He adds that while the market calls for 100 basis points in rate cuts by the end of this year, he does expect the Fed to signal way less.
He then shed light on supply challenges in the technology sector, hinting that demand is not the issue at the moment. He was particularly impressed by the earnings posted by AI companies. Draho expects tech companies to have strong balance sheets and strong earnings power by the end of 2024, making them attractive stocks despite the economic turmoil.
“Volatility Over the Last Several Weeks is Unwarranted”
On September 13, Andrew Krei, Crescent Grove Advisors co-chief investment officer, appeared in an interview on Yahoo Finance to share his bullish outlook on the economy and financial markets. Krei discussed the labor market trends and how they may impact the Fed’s decisions in the upcoming meeting.
Krei pressed that despite the “unwarranted” volatility over the past few weeks, the economic outlook remains favorable, with credit markets showing close to no signs of stress. Krei also shed light on the global economic backdrop, suggesting that international markets, especially Europe, Japan, and China were showing strong signs of recovery in trade and manufacturing.
As far as investment goes, Krei suggests that while mega-cap tech stocks have shown promising results, he is more bullish on stocks outside of the magnificent 7. He was particularly inclined to companies in healthcare, finance, and industrials, hinting that these sectors will benefit immensely from the easing cycle. He then suggested that investors must shift their focus to diversified stocks with lower valuations and relatively stronger risk-adjusted returns.
Whatever the state of the economy, some stocks are notorious for their strong and consistent financial results.
Pixabay/Public Domain
Our Methodology
To come up with the 12 best blue chip stocks to invest in according to short sellers, we first went over multiple similar rankings, our own rankings, and ETFs to compile a list of blue chip stocks. We then found the companies with the lowest short float and ranked the top 12 with the largest number of hedge fund holders and lowest short float percentage. The stocks are sorted in descending order of their short interest.
Why are we interested in the stocks that hedge funds pile into? The reason is simple: our research has shown that we can outperform the market by imitating the top stock picks of the best hedge funds. Our quarterly newsletter’s strategy selects 14 small-cap and large-cap stocks every quarter and has returned 275% since May 2014, beating its benchmark by 150 percentage points (see more details here).
Is Berkshire Hathaway (BRK-B) the Best Blue Chip Stock To Invest In According to Short Sellers?
Berkshire Hathaway Inc. (NYSE:BRK-B)
Number of Hedge Fund Holders: 120
Short % of Shares Outstanding: 0.57%
Berkshire Hathaway Inc. (NYSE:BRK-B) is a multinational conglomerate company that operates in the financial services, insurance, energy, transportation, rail, and utility industries. The company not only provides services across several insurance lines, but also engages in the generation and distribution of electricity from natural gas, coal, wind, solar, and nuclear sources. Berkshire Hathaway also retails household appliances, electronics, kitchenware, and motorcycle equipment.
The company boasts a reliable source of income from its stable operating businesses. In the second quarter of 2024, Berkshire Hathaway Inc. (NYSE:BRK-B) logged $93 billion in revenue, of which $26 billion came from insurance. In addition to that, the company has ownership rights and control over multiple major companies. According to the company’s latest shareholder letter, it currently owns 6% of the entire universe in which it operates.
Insurance underwriting and insurance investment income were the two primary segments of the company in FY 2023, reporting $5.4 billion and $9.6 billion in operating earnings, respectively. Its railroad segment was the third largest segment, with operating earnings worth $5 billion.
Berkshire Hathaway Inc. (NYSE:BRK-B) is one of the best blue chip stocks and we say that because the company has strong roots in multiple industries diversifying its risk. According to our database, 120 hedge funds held stakes in Berkshire Hathaway Inc. (NYSE:BRK-B) and the Bill & Melinda Gates Foundation Trust was the largest shareholder of the company, as of June 30.
Overall BRK ranks 2nd on our list of the best blue chip stocks to invest in according to short sellers. While we acknowledge the potential of BRK as an investment, our conviction lies in the belief that AI stocks hold greater promise for delivering higher returns, and doing so within a shorter time frame. If you are looking for an AI stock that is more promising than BRK but that trades at less than 5 times its earnings, check out our report about the cheapest AI stock.
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Disclosure: None. This article is originally published at Insider Monkey.