We recently published a list of 12 Stocks Most Held by Hedge Funds. In this article, we are going to look at where Taiwan Semiconductor Manufacturing Company Limited (NYSE:TSM) stands against other most held stocks by hedge funds.
On December 12, President-elect Donald Trump rang the opening bell at the New York Stock Exchange, an event rich with symbolism for his pro-business economic agenda and his commitment to revitalize the US economy. During the event, Trump reiterated his promises to lower the corporate tax rate from 21% to 15% for companies that manufacture in the US. He also mentioned plans to reduce taxes on capital gains and dividends, a move designed to attract investor support and drive market growth. Addressing the crowd at the NYSE, Trump emphasized the importance of his economic policies in creating jobs and strengthening the economy. He said that the stock market’s performance is the barometer of his economic success and promised that the country’s economy would be very strong under his administration. Investors have responded positively to Trump’s election, with the S&P 500 experiencing gains since his victory. His plans for tax cuts and deregulation have been welcomed by Wall Street and business leaders.
In an interview with Bloomberg on December 13, Mike Wilson, Chief US Equity Strategist at Morgan Stanley, discussed his outlook for the stock market and the economy. Wilson noted that the market has traded well over the past few months due to favorable developments, including a definitive election outcome, the Federal Reserve’s monetary policy adjustments, and steady economic growth without a hard landing. He mentioned that Morgan Stanley’s target for the S&P 500 to reach 6,100 by the end of 2024 has been met and revealed the updated projection for the S&P 500, forecasting it to reach 6,500 by the end of 2025. This outlook is based on the base assumption of stable economic growth, softening inflation, and the Fed gradually cutting interest rates.
However, Wilson cautioned that there is a potential for inflation to reaccelerate, which could limit the Fed’s ability to cut rates. He acknowledged that financial conditions have loosened significantly, driven by improved market sentiment following the election. Wilson described 2025 as likely to be another volatile year for markets, similar to 2024. He anticipates heightened uncertainty in the first half of the year, with clarity potentially emerging in the second half.
Wilson’s overall view is that the economy is still late-cycle and his team is narrow and focusing on large-cap quality stocks rather than small-caps or low-quality stocks. This approach is based on the belief that in a late-cycle economy with high rates, smaller and lower-quality companies are more vulnerable and less likely to outperform.
Favorable developments have brought a sense of optimism to the financial markets. While there are still some risks, like potential inflation, investors are optimistic about the future, especially about large-cap companies.
Our Methodology
To compile our list of the 12 stocks most held by hedge funds. We scanned Insider Monkey’s Hedge Fund database to rank 12 stocks according to the largest number of hedge fund holders, as of Q3 2024. The list is sorted in ascending order of hedge fund sentiment.
Why do we care about what hedge funds do? 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).
Taiwan Semiconductor Manufacturing Company Limited (NYSE:TSM)
Number of Hedge Fund Investors: 158
Taiwan Semiconductor Manufacturing Company Limited (NYSE:TSM) is a leading global semiconductor foundry, renowned for its cutting-edge technology and manufacturing capabilities. The company has pioneered the dedicated foundry business model, enabling the rapid growth of the semiconductor industry by providing advanced process technologies and high-quality manufacturing services to a diverse range of customers.
Taiwan Semiconductor Manufacturing Company Limited (NYSE:TSM) has consistently maintained its position at the forefront of the semiconductor industry, driving advancements in areas such as high-performance computing (HPC), artificial intelligence (AI), and mobile technologies. The company is actively expanding its global manufacturing footprint to meet the growing demand for advanced semiconductor technologies and to provide geographic flexibility to its customers. In the United States, Taiwan Semiconductor Manufacturing Company Limited (NYSE:TSM) plans to build three fabs in Arizona, with the first expected to start volume production in early 2025. The second and third fabs are scheduled to begin production in 2028 and by the end of the decade, respectively. This expansion not only enhances Taiwan Semiconductor Manufacturing Company Limited’s (NYSE:TSM) capacity but also aims to strengthen its strategic partnership with U.S. customers and the U.S. semiconductor industry.
In Japan, Taiwan Semiconductor Manufacturing Company Limited (NYSE:TSM) is preparing for the construction of a second fab, which will support consumer, automotive, industrial, and HPC-related applications, with volume production targeted by the end of 2027. Additionally, Taiwan Semiconductor Manufacturing Company Limited (NYSE:TSM) has held a groundbreaking ceremony in Dresden, Germany, for a specialty technology fab focused on automotive and industrial applications, with volume production scheduled to begin by the end of 2027.
Overall, TSM ranks 7th on our list of one of the most held stocks by hedge funds. While we acknowledge the potential of TSM to grow, 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 TSM 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.