Investing

5 Stocks That Top Hedge Funds Own the Most of Now

Allergan

This company is being bought by pharmaceutical giant Pfizer in a massive $160 billion deal. Allergan Inc. (NYSE: AGN) focuses on developing, manufacturing and commercializing innovative branded pharmaceuticals, high-quality generic and over-the-counter medicines, and biologic products for patients around the world.

It markets a portfolio of best-in-class products that provide valuable treatments for the central nervous system, eye care, medical aesthetics, gastroenterology, women’s health, urology, cardiovascular and anti-infective therapeutic categories, and it operates the world’s third-largest global generics business, providing patients around the globe with increased access to affordable, high-quality medicines. Allergan is an industry leader in research and development, with one of the broadest development pipelines in the pharmaceutical industry and a leading position in the submission of generic product applications globally.

Some 28 hedge funds own the stock and continue to wait as the Treasury Department announced recently that it is working on new rules for corporate tax inversions, which is potentially what the Pfizer/Allergan deal would be, and could possibly throw wrench into the negotiations. Pfizer executives maintain that the government will not scuttle the deal.

The consensus price objective is posted at $366.07. The shares traded on Tuesday at $285.64.

Microsoft

This old-school technology company has a massive $99 billion sitting on the balance sheet, and 24 hedge funds own the stock now. Microsoft Inc. (NASDAQ: MSFT) develops, licenses and supports software products, services and devices worldwide.

Its Devices and Consumer Licensing segment licenses Windows operating system and related software, Microsoft Office for consumers and the Windows Phone operating system. Its Computing and Gaming Hardware segment provides Xbox gaming and entertainment consoles and accessories, second-party and third-party video games and Xbox Live subscriptions, as well as Surface devices and accessories and Microsoft personal computer (PC) accessories.

Numerous Wall Street analysts feel that Microsoft has become a clear number two in the public or hyper-scale cloud infrastructure market with Azure, which is the company’s cloud computing platform offering. Some have flagged Azure as a solid rival to Amazon’s AWS service. This could be one major reason so many hedge funds are bullish on Microsoft.

Investors receive a very solid 2.78% dividend, and the forward valuation remains compelling. The consensus price target is $58.56. Shares were trading on Tuesday at $51.36.

Amazon

This is the absolute leader in online retail and also a dominate player in cloud storage business, but it missed estimates badly and got hit hard in January. Amazon.com Inc. (NASDAQ: AMZN) serves consumers through retail websites, which primarily include merchandise and content purchased for resale from vendors and those offered by third-party sellers. In addition, the company serves developers and enterprises through Amazon Web Services (AWS) that provides compute, storage, database, analytics, applications and deployment services that enable virtually various businesses.

Amazon’s fourth-quarter results were below Wall Street estimates on almost all metrics, and the guidance for the first quarter was somewhat mixed. While the North American revenues rose a solid 24%, they came in below some estimates. While the stock was pounded, many remain buyers on this weakness, as the e-commerce giant has a distinct fulfillment advantage and remains a core technology holding. A total of 21 hedge funds own the stock, and given the steep sell-off this year, more may be adding to positions.

The consensus price objective is set at a whopping $739.57. Shares were trading on Tuesday at $550.01.


After a disastrous 2015, many hedge funds may be reassessing their positions and going with solid large cap companies that have outstanding prospects. All five of these companies certainly fit that bill.

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