In this article, we discuss the top 5 stocks to buy according to legendary value investor Joel Greenblatt. If you want our detailed analysis of Greenblatt’s history, investment philosophy, and hedge fund performance, go directly to the Top 10 Stocks to Buy According to Legendary Value Investor Joel Greenblatt.
5. Alphabet Inc. (NASDAQ:GOOG)
Gotham Asset Management’s Stake Value: $41,667,000
Percentage of Gotham Asset Management’s 13F Portfolio: 1.68%
Number of Hedge Fund Holders: 156
Legendary value investor Joel Greenblatt increased his stake in Alphabet Inc. (NASDAQ:GOOG) by 8% in the Q3 2021, holding 15,585 shares worth $41.6 million. Alphabet Inc. (NASDAQ:GOOG) stock represents 1.68% of the total Q3 investments of Joel Greenblatt.
Tigress Financial analyst Ivan Feinseth on December 3 raised the price target on Alphabet Inc. (NASDAQ:GOOG) to $3,540 from $3,185 and reiterated a Strong Buy rating on the shares. The analyst observed that Alphabet Inc. (NASDAQ:GOOG)’s increasing artificial intelligence focus is driving greater product functionality and presents “significant” growth opportunities, in addition to “enabling the development of more helpful products”.
Of the 156 hedge funds that were long Alphabet Inc. (NASDAQ:GOOG) at the end of September, Chris Hohn’s TCI Fund Management is the largest stakeholder of the company, holding a $7.86 billion position in Alphabet Inc. (NASDAQ:GOOG).
Here is what Saturna Capital Amana Funds has to say about Alphabet Inc. (NASDAQ:GOOG) in its Q3 2021 investor letter:
“Alphabet was a new addition to the Fund this year, as we believed it important to have exposure to the top online media and advertising company in the world. Some have raised concerns surrounding Alphabet’s exposure to political interference, but we take comfort from the belief that were the company to be broken up, it would quite likely be worth even more than as a single entity.”
4. Amazon.com, Inc. (NASDAQ:AMZN)
Gotham Asset Management’s Stake Value: $43,257,000
Percentage of Gotham Asset Management’s 13F Portfolio: 1.75%
Number of Hedge Fund Holders: 242
In Q3 2021, Gotham Asset Management owned 13,168 Amazon.com, Inc. (NASDAQ:AMZN) shares, worth $43.25 million, representing 1.75% of the hedge fund’s 13F portfolio. Joel Greenblatt increased his stake in Amazon.com, Inc. (NASDAQ:AMZN) by 8% in the third quarter.
Amazon.com, Inc. (NASDAQ:AMZN) published Q3 earnings on October 28, posting an EPS of $6.12, missing estimates by $2.78. The $110.81 billion revenue gained 15.26% year-over-year, but missed estimates by almost $785 million.
Cowen analyst John Blackledge raised the price target on Amazon.com, Inc. (NASDAQ:AMZN) to $4,500 from $4,300 and kept an Outperform rating on the shares on December 13, calling it his Best Idea for 2022 and the top mega-cap pick.
Fisher Asset Management is one of the leading Amazon.com, Inc. (NASDAQ:AMZN) stakeholders from the 242 hedge funds that were bullish on the stock as of the third quarter of 2021. Ken Fisher’s fund holds a $6.34 billion position in Amazon.com, Inc. (NASDAQ:AMZN).
Here is what Davis Opportunity Fund has to say about Amazon.com, Inc. (NASDAQ:AMZN) in its Q3 2021 investor letter:
“E-commerce, online search and advertising, social media and software are another component of the portfolio that have proven, attractive businesses. The online portion of the Fund is currently dominated by such market leaders as Amazon.com. We are attracted to these names based on the size and rapid expansion of their market opportunities globally, their ability to generate and grow new revenue sources through constant innovation, ample operating leverage as they continue to scale and capable, focused, highly competitive leadership teams. If purchased at sensible prices, these types of businesses in our experience can contribute meaningfully to long-term results.”
3. Microsoft Corporation (NASDAQ:MSFT)
Gotham Asset Management’s Stake Value: $56,504,000
Percentage of Gotham Asset Management’s 13F Portfolio: 2.29%
Number of Hedge Fund Holders: 250
Microsoft Corporation (NASDAQ:MSFT) is an American multinational technology company offering operating systems, computer software, and consumer electronics. Microsoft Corporation (NASDAQ:MSFT) is a top stock to buy according to legendary value investor Joel Greenblatt in the third quarter, with Greenblatt holding 200,426 Microsoft Corporation (NASDAQ:MSFT) shares, worth $56.5 million, representing 2.29% of his 13F portfolio.
On December 2, Wells Fargo analyst Michael Turrin kept an Overweight rating on Microsoft Corporation (NASDAQ:MSFT), stating that Dynamics 365 remained an important growth driver and product category for Microsoft Corporation (NASDAQ:MSFT), and Power Automate was the market leader in total adoption.
Here is what Baron Opportunity Fund has to say about Microsoft Corporation (NASDAQ:MSFT) in its Q3 2021 investor letter:
“Shares of Microsoft Corporation, a cloud-software leader and provider of software productivity tools and infrastructure, rose during the quarter following a strong earnings report highlighting solid demand for its broad product stack and continued momentum migrating its business to the cloud. Microsoft’s results continued to be strong across the board, with total revenue beating Street estimates by 4.5%, an acceleration in Commercial Cloud revenue to 31% constant-currency growth, a four-point improvement in Commercial Cloud gross margins (to 70% from 66%), and GAAP earnings up 42%. We believe the company is positioned to deliver 13% to 15% organic growth over the next three years, underpinned by TAM expansion across its disruptive cloud product portfolio, as more companies look to transform and digitize their businesses, as well as strong operating leverage as its cloud products gain scale.”
2. SPDR S&P 500 ETF Trust (NYSE:SPY)
Gotham Asset Management’s Stake Value: $62,450,000
Percentage of Gotham Asset Management’s 13F Portfolio: 2.53%
Number of Hedge Fund Holders: 69
SPDR S&P 500 ETF Trust (NYSE:SPY), an exchange traded fund designed to track the S&P 500 Index, is one of the top holdings of Joel Greenblatt. Greenblatt, via Gotham Asset Management, holds 145,524 SPDR S&P 500 ETF Trust (NYSE:SPY) shares, worth $62.45 million, representing 2.53% of the fund’s total investments in the third quarter. Gotham Asset Management increased its stake in the ETF by 64% in Q3.
With a net asset value exceeding $467 billion, SPDR S&P 500 ETF Trust (NYSE:SPY) is the largest ETF in the world. One of the leading SPDR S&P 500 ETF Trust (NYSE:SPY) stakeholders from the third quarter is LMR Partners, with 2.7 million shares worth $1.15 billion.
A total of 69 hedge funds were bullish on SPDR S&P 500 ETF Trust (NYSE:SPY) in the third quarter of 2021, down from 76 funds in the previous quarter.
1. Tidal ETF Trust – SoFi Select 500 ETF (NYSE:SFY)
Gotham Asset Management’s Stake Value: $64,380,000
Percentage of Gotham Asset Management’s 13F Portfolio: 2.61%
Number of Hedge Fund Holders: N/A
The largest holding in the Q3 portfolio of legendary value investor Joel Greenblatt is Tidal ETF Trust – SoFi Select 500 ETF (NYSE:SFY), which is a new arrival in his portfolio, with the hedge fund manager holding 2.78 million shares of Tidal ETF Trust – SoFi Select 500 ETF (NYSE:SFY), worth $64.38 million, representing 2.61% of his total investments.
Launched and operated by Toroso Investments, Tidal ETF Trust – SoFi Select 500 ETF (NYSE:SFY) invests in growth and value stocks, giving investors an exposure to a mix of mid to large cap companies. It seeks to track the performance of the SoFi Social 50 Index, by using full replication technique.
You can also take a look at 10 Dividend Aristocrats to Buy for 2022 and 10 Best Jim Cramer Stocks to Watch in December.
