As we have noted before, over the past couple of years hedge fund performance, especially by some of the bigger funds, has trailed overall market performance. Part of the problem for some funds, especially those that are long/short, is that market volatility for the most part has remained tepid.
That all changed back in March and April when the market plunged 35% in less than a month, and the CBOE Volatility Index (VIX) exploded up to the 85 level. While the VIX has settled down since, currently trading at about 26, the volatility is still much more than we saw for the past few years.
Despite the underperformance of some managers, the holdings of the top hedge funds are always of interest to investors, and with good reason. Since portfolio managers tend to talk among themselves, good ideas are spread around and often end up in many portfolios.
A new Jefferies research report covers in detail the holdings of hedge funds. Here, we focus on the stocks added the most to long-only portfolios now. Seven companies are on the list, and they all are good ideas for long-term growth investors. It’s important to remember that no single analyst report should be used as a sole basis for any buying or selling decision.
Accenture
This is a great way for investors to play information technology. Accenture PLC (NYSE: ACN) provides consulting, technology and outsourcing services worldwide.
The company’s Communications, Media & Technology segment provides professional services for clients to accelerate and deliver digital transformation, develop industry-specific solutions and enhance efficiencies and business results for communications, media, high-tech, software and platform companies.
The Financial Services segment offers services for profitability pressures, industry consolidation, regulatory changes and the need to adapt continually to new digital technologies for banking, capital market and insurance industries.
Its Health & Public Service segment provides consulting services and digital solutions to help clients deliver social, economic, and health outcomes for health care payers and providers, government departments and agencies, public service organizations, educational institutions and nonprofit organizations.
Shareholders receive a 1.45% dividend. The Wall Street consensus price target is $224.88, which is below Monday’s closing price of $227.18 a share.
Kellogg
It should come as no surprise the hedge funds are adding this cereal maker, given the recent stay-at-home edicts. Kellogg Co. (NYSE: K) is a multinational food manufacturing company. Its principal products include crackers, crisps, savory snacks, toaster pastries, cereal bars, granola bars and bites, ready-to-eat cereals, frozen waffles, veggie foods and noodles.
The company offers its products under the Kellogg’s, Cheez-It, Pringles, Austin, Parati, RXBAR, Kashi, Bear Naked, Eggo, Morningstar Farms, Choco Krispies, Crunchy Nut, Nutri-Grain, Special K, Squares, Zucaritas, Sucrilhos, Pop-Tarts, K-Time, Split Stix, Be Natural, Coco Pops, Rice Krispies Squares, Vector and Gardenburger brand names.
Shareholders receive a 3.30% dividend. The consensus price target stands at $69.00, but Kellogg stock closed at $69.35 on Monday.
Roku
This stock has been on fire and is a pandemic winner. Roku Inc. (NASDAQ: ROKU) provides a streaming platform for television. It operates through the following business segments.
The Player segment consists of net sales of streaming media players and accessories through retailers and distributors, as well as directly to customers through the company’s website. The Platform segment includes fees received from advertisers and content publishers, and from licensing the company’s technology and proprietary operating system to service operators.
With many people cutting the proverbial cable and satellite cord, this is a great way to play the sector.
The consensus price target is $137.36. Roku stock closed way above that level at $161.82, up almost 5% on Monday.
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