We maintain a database of quarterly 13F filings from hundreds of hedge funds and other notable investors. Our research has shown that this information can be useful in developing investment strategies: on average, the most popular small cap stocks among hedge funds generate an average excess return of 18 percentage points per year and a sample portfolio based on this technique outperformed the S&P 500 by 33 percentage points in the last 11 months. Learn more about our small cap strategy. We also like to go through our database and identify trends in how the filers we track are playing the market, including which stocks they tend to favor in certain industries or sectors. Read on for the ten stocks which the largest number of filers in our database reported owning as of the end of June.
75 hedge funds and other investors in our database owned shares of Pfizer Inc. (NYSE:PFE) at the end of Q2. Pfizer Inc. (NYSE:PFE) had been billionaire Ken Fisher (manager of Fisher Asset Management)’s stock pick for 2013; the asset management firm had owned about 31 million shares. Find Fisher’s favorite stocks. The company carries a forward earnings multiple of only 12, and has recently been selling assets to focus on its core business.
A number of funds initiated positions in Gilead Sciences, Inc. (NASDAQ:GILD) last quarter, placing it right behind Pfizer Inc. (NYSE:PFE) on this list. At its current valuation the biopharmaceutical company is pricy in terms of its trailing results, but the stock has more than doubled in the last year as markets have high expectations for its products in development. Billionaire Steve Cohen’s SAC Capital Advisors was buying Gilead last quarter (see Cohen’s stock picks).
Pharmacy benefit management services company Express Scripts Holding Company (NASDAQ:ESRX) rose a bit in popularity, allowing the company to snag the #3 slot. As with Pfizer Inc. (NYSE:PFE), Express Scripts is actually trading at close to value levels; for example, the forward P/E is only 13. Billionaire Leon Cooperman’s hedge fund Omega Advisors had 2.7 million shares of the stock in its portfolio (check out more stocks Omega owns).
On net, 9 hedge funds added Merck & Co., Inc. (NYSE:MRK) to their portfolio last quarter, and healthcare-focused fund Orbimed Advisors increased its stake in the drug company by 86%. Research more stocks Orbimed has been buying. At current prices and dividend levels, Merck’s dividend yield is 3.6% putting it in line to slightly above the yields at other large pharmaceutical companies (Pfizer’s dividend yield is 3.4%).
64 filers in our database were long Johnson & Johnson (NYSE:JNJ). Johnson & Johnson’s business has been growing, though some future growth is already baked in at a trailing P/E of 20. George Soros’s hedge fund Soros Fund Management disclosed ownership of 2.5 million shares in its 13F (see more stocks the fund likes).
Leading hospital company HCA Holdings Inc (NYSE:HCA) grabbed the seventh slot on our list, even though a number of funds- including Highbridge Capital Management, run by billionaire Glenn Dubin- dumped all of their shares. Growth has been only modest, though the stock is arguably a value play at low earnings multiples.
Generic drug company Actavis Inc (NYSE:ACT), which is currently in the process of acquiring Warner Chilcott and relocating to Ireland, saw a good deal of buying from the funds in our database during Q2. Billionaire Andreas Halvorsen’s Viking Global was among the hedge funds buying in (check out more picks from Viking Global).
Placing tenth on our list is health insurer UnitedHealth Group Inc. (NYSE:UNH), at 57 filers. Health insurers are generally cheap as markets expect slow profits growth over the next several years, and also account for the uncertainty of future regulation. With UnitedHealth doing well last quarter, it may be worth considering in value terms.
Disclosure: I own no shares of any stocks mentioned in this article.
