We recently published a list of Top 10 Stocks to Buy According to Adage Capital Management. In this article, we are going to take a look at where Berkshire Hathaway Inc. (NYSE:BRK-A) stands against other top stocks to buy according to Adage Capital Management.
Adage Capital Management, based in Boston, is a major investment firm specializing in managing the broader market’s assets, with a strong focus on Endowments and Foundations. Among its prominent clients are institutions such as Harvard University, Dartmouth College, Northwestern University, the American Red Cross, and the Getty Foundation. Over the last 15 years, Adage and its predecessor, the Select Equity Group at Harvard Management Company, have consistently surpassed the wider market’s performance by an average of 3.5%.
The firm’s origins date back to the mid-1980s when co-founders Phillip Gross and Robert Atchinson met as investment analysts for Harvard’s endowment. In the 1990s, following controversy over large performance bonuses at Harvard Management, they, along with an 18-person team, left to establish Adage Capital Management. Their launch was backed by a $1.8 billion initial investment from Harvard, with an agreement that the university would receive 10% of Adage’s earnings.
Adage Capital Management primarily manages the broader market’s assets for endowments and foundations, utilizing a long/short equity strategy driven by fundamental analysis. The firm also explores risk arbitrage and event-driven investment opportunities when suitable.
Phillip Gross, more commonly known as Phill Gross, co-founded Adage Capital Management, L.P. in 2001 and serves as a Managing Director and Healthcare Portfolio Manager. Before establishing the firm, he spent 18 years at Harvard Management Company, Inc., where he held roles as a Healthcare and Retail Analyst, Equity Research Director, and Partner.
Gross earned both his B.S. in finance and economics in 1982 and M.S. in investments in 1983 from the University of Wisconsin. He previously served on the UW Foundation Board of Directors and is currently involved with the Steve Hawk Center for Applied Securities Analysis Advisory Board and the Nicholas Center for Applied Corporate Finance Advisory Board. In 2006, he was honored with the Distinguished Alumnus Award from the UW Business School.
In philanthropy, Gross co-founded Strategic Grant Partners, an initiative aimed at systemic change in education and family services in Massachusetts. He serves as Vice President of the Board of Directors for Youth Enrichment Services, a Boston-based organization that introduces urban youth to outdoor activities. Additionally, he is a Board Trustee of the U.S. Ski and Snowboard Association, vice-chair of its Investment Committee, and a board member of the T2 Foundation.
Adage Capital Management’s Q4 2024 13F filing reported $57.19 billion in managed 13F securities, with its top 10 holdings accounting for 31.7% of the total portfolio. This distribution highlights the firm’s diversified investment approach.
Our Methodology
The stocks discussed below were picked from Adage Capital Management’s Q4 2024 13F filings. They are compiled in the ascending order of the hedge fund’s stake in them as of December 31, 2024. To assist readers with more context, we have included the hedge fund sentiment regarding each stock using data from over 1,000 hedge funds tracked by Insider Monkey in the fourth quarter of 2024.
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 373.4% since May 2014, beating its benchmark by 218 percentage points (see more details here).
A team of insurance professionals in a boardroom overlooking a city skyline.
Berkshire Hathaway Inc. (NYSE:BRK-A)
Number of Hedge Fund Holders as of Q4: 131
Adage Capital Management’s Equity Stake: $830.62 Million
A multinational holding company headquartered in Omaha, Nebraska, Berkshire Hathaway Inc. (NYSE:BRK-A) owns a diverse portfolio of businesses across industries such as insurance, utilities, energy, transportation, manufacturing, and retail. In addition to its wholly owned subsidiaries, which include Geico, Duracell, Dairy Queen, Fruit of the Loom, and railroad operator BNSF, Berkshire holds significant investments in publicly traded companies like Apple, Bank of America, and Coca-Cola. Its broad investment approach has solidified its reputation as a dominant force in the global financial landscape. Instead of frequently trading stocks, the company follows a buy-and-hold strategy, often acquiring entire businesses or significant stakes in corporations. This approach enables Berkshire to exert control over its investments and establish strong relationships with company management.
Berkshire Hathaway Inc. (NYSE:BRK-A) reported a 71% surge in operating earnings during the fourth quarter, largely driven by higher interest rates that boosted investment income and improved its insurance business. The company’s operating earnings reached $14.5 billion in the three months ending in December. A key contributor to this growth was a 48% increase in insurance investment income, which rose to $4.1 billion. The favorable interest rate environment played a crucial role in strengthening the conglomerate’s financial performance.
Warren Buffett recently made headlines after reducing Berkshire’s substantial holding in Apple and amassing a record cash reserve just before a stock market decline. The company nearly doubled its liquid assets, including cash and Treasury bills, to $334 billion in 2024. This expansion was largely attributed to the net sale of $134 billion in stocks while spending under $3 billion on share buybacks, halting them entirely in the latter half of the year. By contrast, Berkshire Hathaway Inc. (NYSE:BRK-A) sold a net $24 billion in stocks and repurchased over $9 billion of its own shares in 2023. Despite concerns about the company’s growing cash position, Buffett reassured shareholders in his annual letter that the majority of Berkshire Hathaway Inc. (NYSE:BRK-A)’s assets remain invested in equities, including both public stocks and wholly owned businesses.
Overall, BRK-A ranks 10th on our list of top stocks to buy according to Adage Capital Management. While we acknowledge the potential for BRK-A as an investment, our conviction lies in the belief that some 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-A but that trades at less than 5 times its earnings, check out our report about the cheapest AI stock.
READ NEXT: 20 Best AI Stocks To Buy Now and 30 Best Stocks to Buy Now According to Billionaires
Disclosure: None. This article is originally published at Insider Monkey.
