Why Hedge Funds Love These 6 Stocks During a Recession
During the downtime, the professionals separate themselves from retail investors. The pros are much better equipped to separate the wheat from the chaff. Most of the best investment professionals work in hedge funds.
Below are six stocks that make up significant holdings at several well-known hedge funds, including Michael Burry’s Scion Asset Management and Leon Cooperman’s Omega Advisors.
1. Alphabet (NASDAQ: GOOGL, GOOG)
The parent company of search engine behemoth Google and the original user-generated platform, YouTube, is due to a 20-for-1 stock split on July 15. Management is hoping that the split can add fuel to the rally that started last week.
The company’s sheer dominance in the spaces it operates in and how its platforms are woven into our everyday lives (your humble author is listening to a podcast on YouTube as he writes this) virtually guarantees that its business will endure all but the most extreme environments.
Alphabet is currently trading at $2,232.38 per share, down -2.11% on the day. YTD, GOOGL stock is down -23.02%.
Learn more about Alphabet: Website | Investor Deck | GOOGL Chart
2. Apollo Global Management (NYSE: APO)
Previously a private equity management company, Apollo merged with Athene Holding in late 2021 to add retirement savings and insurance to their portfolio. The company’s price to forward earnings of only 7.5 makes it relatively undervalued to the broader market. Whenever the broader market turns, this value play should bear fruit. Its 3% dividend also means it can serve as a source of income to fund further buying opportunities.
Apollo Global Management last traded at $50.30 per share, down -0.81% on the day. YTD, APO stock is down -29.68%.
Learn more about Apollo Global Management: Website | Investor Deck | APO Chart
3. Booking Holdings (NASDAQ: BKNG)
If you believe the issues plaguing the travel industry are merely short-term obstacles and the industry will return to normal, one might consider Booking Holdings, which owns booking.com, one of the world’s largest hotel travel booking sites. One can book virtually their entire trip on the site, with packages that include flights, hotels, rental cars and attractions. There have been signs that the travel industry is beginning to get back to business as usual, including the elimination of vaccine/mask requirements and international air travel picking up. Look for booking.com to become a significant beneficiary of the rebound.
Booking Holdings is currently changing hands at $1,740.65 per share, up +0.14% on the day. YTD, BKNG stock is down -29.28%.
Learn more about Booking Holdings: Website | Investor Deck | BKNG Chart
Also Read: Top 5 Short Squeeze Candidates Investors Should Keep An Eye
4. Bristol Myers Squibb (NYSE: BMY)
The oldest company on this list, Bristol Myers Squibb, is one of the world’s largest pharmaceutical companies, with 2021 revenues of $46.4 billion. The company has products in the market targeting a large range of disorders, including cardiovascular disease, diabetes, cancer, infectious diseases and psychiatry.
The majority (56%) of the company’s revenue comes from the U.S., while Europe accounts for 25%. While the company has several drugs on the market, most of its revenue is derived from only a handful. The company’s cancer drugs Revlimid and Opdivo brought in a combined $20.3 billion, good for 43.8% of revenue, followed by anticoagulant Eliquis with $10.8 million, or 23.3% of revenue; these three drugs account for two-thirds of Bristol Myers Squibb’s revenue. With more strong candidates in its developmental pipeline, the company has a solid foundation to ride out whatever comes.
Bristol Myers Squibb closed today’s trading session at $74.53 per share, down -0.64% on the day. YTD, BMY stock is up +20.44%.
Learn more about Bristol-Myers: Website | Investor Deck | BMY Chart
5. Mr. Cooper Group (NASDAQ: COOP)
With the recent housing boom not yet slowed by rising interest rates and a long-term housing shortage still in effect, the demand for new mortgages and mortgage servicing should remain strong for the foreseeable future. Enter Mr. Cooper Group, whose primary business model is to service mortgages for the nation’s largest lenders.
Mr. Cooper Group has primarily grown by consolidating other mortgage servicers, including Nationstar Mortgage LLC, which was previously the largest non-bank mortgage processor in the U.S. The company is also entering the loan origination business, which is making up an increasingly large portion of their revenues
Mr. Cooper Group closed trading today at $38.41 per share, up +0.18% on the day. YTD, COOP stock is down -8.92%.
Learn more about Mr. Cooper Group: Website | Investor Deck | COOP Chart
6. Warner Brothers Discovery (NASDAQ: WBD)
After previously being under the AT&T umbrella, Warner Media merged with Discovery Inc. in April 2022 to form Warner Bros Discovery Inc. The newly formed company has many media brands and U.S. television channels, including HBO, CNN, Discovery Channel, DC Entertainment, Food Network and HGTV. The company’s Global Streaming & Interactive Entertainment division includes popular streaming apps Discovery+ and HBO Max.
Due to some unfavorable terms in the spinoff from AT&T and the overall bear market, the stock has been roughly cut in half since its April IPO. The underlying business, however, is going strong, including 13% YoY revenue growth in their most recent quarter.
Warner Brothers Discovery closed today’s trading session at $14.18 per share, up +1.65% on the day. YTD, WBD stock is down -44.39%.
Learn more about Warner Brothers Discovery: Website | Investor Deck | WBD Chart
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Disclaimer: Wealthy VC does not hold a position in any of the stocks mentioned in this article.
