3 Favorite Hedge Fund Stocks to Buy Now

These Hedge Fund Favorites Can Be Great Long-Term Games

While investors shouldn’t blindly follow the movements of the hedge fund market, there’s something interesting about examining the moves “smart money” makes each quarter. This is especially true in 2022, as market volatility and complex macroeconomic factors play a large role in equities this year. While investors won’t have direct insight into the purchases hedge funds made in Q1 until the next batch of regulatory filings announced in May, it doesn’t hurt to take a look at some of the stocks that big investors tend to prefer.
Certain stocks become hedge fund favorites from time to time for a variety of reasons, and paying attention to the name that appears repeatedly in their holdings can help you have extra confidence in your purchase. That’s why we’ve put together a list of the following 3 favorite hedge fund stocks to buy now so you can get a better idea of ​​the stocks that institutional investors hold. Let’s take a deeper look below.
MercadoLibre (NASDAQ:MELI)
First is MercadoLibre, a growth stock that offers exposure to emerging markets in Latin America. While we know that high-value stocks are out of favor in 2022, this hedge fund favorite could be a great buy-the-dip opportunity considering the stock is down more than 21% year-to-date. MercadoLibre operates the largest e-commerce marketplace in Latin America, which is certainly a compelling reason to consider adding stock given how consumer preferences are rapidly shifting to online shopping. The company also has advertising businesses, payment and financing operations, logistics solutions, and more, all of which complement its e-commerce business well.
It should be noted that Brazil’s Q4 GDP picked up, which could mean major economies in Latin America are rebounding. In addition, the fact that the pandemic may have accelerated the widespread use of digital payments in Latin America is another plus for MercadoLibre given its business model. The bottom line here is that MercadoLibre is a truly dominant force in the Latin American e-commerce industry, and adding stocks for the long term after such a dramatic setback could be a wise decision.
Cisco Systems (NASDAQ:CSCO)
Next up is the hedge fund’s preferred blue-chip technology stock, Cisco Systems. This is the perfect type of company to consider adding to in today’s market environment, as it is the name of a “value technology” that pays dividends. Cisco is a world leader in communications equipment and a company that offers exposure to exciting trends like cloud, 5G, and cybersecurity, meaning investors may be ignoring the stock’s gains long term. Cisco also offers investors a dividend yield of 2.71% and trades with a very reasonable forward P/E ratio of 16.28, both of which are standout figures in the technology sector.
Cisco finished Q2 with a record $14 billion in deposits, essentially confirming the fact that the company’s spending increased again massively after the pandemic. The company also saw Q2 revenue grow by 6% year-over-year to reach $12.7 billion, increase its dividend by 3%, and authorize an additional $15 billion in share buybacks. With so many companies moving to hybrid cloud environments, Cisco is poised to see strong momentum in its business for years to come, which may be why hedge funds are big fans of the stock.
NVIDIA (NASDAQ:NVDA)
The cutting-edge visual computing company was picked up by several high-profile hedge funds in Q4, including Ken Griffin’s Citadel fund, which increased its position by more than 56% according to 13F’s filing. NVIDIA is definitely a hedge fund favourite, and the semiconductor powerhouse could be a great long-term buying opportunity given that the stock has retreated more than 33% from its recent high. There aren’t many tech stocks out there that can provide exposure to so many exciting new technologies, as NVIDIA’s graphics processing units play a key role in artificial intelligence, personal computers, data centers, mobile phones, and even autonomous vehicles.
The company posted very strong Q4 results including sales of $7.6 billion, representing 53% year-on-year growth. NVIDIA is also guiding a record Q1 to start its fiscal year, which is likely to signal investors that the company is navigating its supply chain issues well. While spring stocks haven’t started well in 2022, it’s hard to argue against adding stock to this innovative and unique company for the long term. If stocks can reclaim their 200-day moving average in the coming weeks, we could be on the verge of a new rally.

NVIDIA is part of the Entrepreneurs Index, which tracks some of the largest publicly traded companies founded and run by entrepreneurs.