Stock Analysis & Ideas

Buying the Dip: Here are the Top 5 Stocks Hedge Funds Bought the Most

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This article ranks the top five stocks bought by hedge fund managers in the last three months. As hedge funds tend to outperform the average market returns, keeping a tab on hedge fund trading activity can help investors identify those stocks that are more likely to outrank others.

Hedge funds are known for beating the average market returns. Thus, keeping a tab on which stocks hedge funds are buying becomes important. With several top stocks trading at a significant discount from their highs, let’s leverage TipRanks’ Hedge Fund Trading Activity tool (it uses data from Form 13-F to offer hedge fund signals) to look at the top five stocks that hedge fund managers bought the most in the last three months.

What are the Most Popular Hedge Fund Stocks?

Here are the Top 5 Most Bought Stocks:

Evelo Biosciences (NASDAQ:EVLO)

Rank: #5
Number of Shares Bought By Hedge Funds: 27.4M

Evelo Biosciences is a clinical-stage biotech company focused on developing orally delivered products for treating inflammatory diseases and cancer. EVLO stock is down about 57% year-to-date. The equity dilution from issuing new shares is the primary reason behind the significant decline in EVLO stock. 

TipRanks’ Hedge Fund Trading Activity tool shows that hedge funds bought 27.4M EVLO stock last quarter. Noubar Afeyan of Flagship Pioneering accumulated EVLO stock on the pullback. 

EVLO stock has received two Buy recommendations for a Moderate Buy rating consensus. Further, the average price target of $10 implies 286.10% upside potential. EVLO stock has a Neutral Smart Score of 4 out of 10.

Cazoo Group (NYSE:CZOO)

Rank: #4
Number of Shares Bought By Hedge Funds: 28.5M

Cazoo Group is an online car retailer across the UK and Europe. CZOO stock has witnessed one of the worst falls and is down about 89% year-to-date. Hedge fund managers used this massive dip to accumulate the stock. 

According to TipRanks’ Hedge Fund Trading Activity tool, hedge funds bought 28.5M CZOO shares last quarter. Pelham Capital’s Charles Hadyn Cunningham invested in CZOO stock. Meanwhile, Greenvale Capital’s Bruce Emery increased his holding. 

While CZOO stock has a positive signal from hedge funds, analysts remain sidelined. CZOO stock has received one Buy and three Hold recommendations for a Hold rating consensus. Further, the average price target of $1.58 implies 136.35% upside potential. Overall, CZOO stock has a Neutral Smart Score of 7 out of 10.

General Electric Company (NYSE:GE)

Rank: #3
Number of Shares Bought By Hedge Funds: 30.8M

General Electric is a multinational conglomerate with businesses across various sectors, including renewable energy, aviation, power, and healthcare. GE stock is down about 18% year-to-date. Meanwhile, hedge funds used the weakness in GE stock to build their positions. 

TipRanks’ Hedge Fund Trading Activity tool shows that hedge funds bought 30.8M GE stock last quarter. Several hedge fund managers, including Bridgewater Associates’ Ray Dalio, Gotham Asset Management’s Joel Greenblatt, and Pzena Investment Management’s Richard Pzena increased their holdings in GE stock. Meanwhile, two hedge fund managers took a new position in GE stock. 

GE stock has received nine Buy and five Hold recommendations for a Moderate Buy rating consensus. Moreover, analysts’ average price target of $86.31 implies 11.05% upside potential. What’s more, GE stock sports a maximum Smart Score of 10.

Ginkgo Bioworks (NYSE:DNA)

Rank: #2
Number of Shares Bought By Hedge Funds: 31.9M

Ginkgo Bioworks is a biotech company that offers a platform to program cells with broad industrial applications. While DNA’s business is growing rapidly, its stock has declined about 66% year-to-date.  

Hedge fund managers used this dip to acquire DNA stock in the last three months. Per the TipRanks’ Hedge Fund Trading Activity tool, hedge funds bought 31.9M DNA shares. ARK Investment Management’s Catherine Wood and Bridgewater Associates’ Ray Dalio took a new position in the stock. Meanwhile, Gotham Asset Management’s Joel Greenblatt increased his holding in DNA stock. 

DNA stock has received four Buy recommendations for a Strong Buy rating consensus. Moreover, analysts’ average price target of $9.21 implies 223.16% upside potential. While analysts’ price target shows significant upside, DNA stock has a Neutral Smart Score of 7 out of 10.

Warner Bros. Discovery (NASDAQ:WBD) 

Rank: #1
Number of Shares Bought By Hedge Funds: 87.4M

Warner Bros. Discovery is a leading global media and entertainment company. It owns some of the most iconic media and entertainment brands, including Discovery Channel, CNN, DC, and HBO. However, challenges following the Discovery merger continue to hurt its stock, which is down about 42% year-to-date. 

Capitalizing on this dip in price, hedge funds have accumulated WBD stock. According to TipRanks’ Hedge Fund Trading Activity, hedge funds bought 87.4M WBD stock last quarter. 

Several hedge fund managers, including Bridgewater Associates’ Ray Dalio, took a new position in WBD stock. Meanwhile, Erica Lau of North Growth Management increased the holding in WBD stock. 

WBD stock has received seven Buys, seven Holds, and one Sell recommendation for a Moderate Buy rating consensus. Moreover, analysts’ average price target of $25.62 implies 86.60% upside potential. WBD stock also has an Outperform Smart Score of 8 out of 10.

Bottom Line 

Hedge fund managers accumulating stocks on the dip represents a positive signal. Besides tracking the buying activities, investors can also use TipRanks’ Top Hedge Fund Managers tool to discover the performance and ranking of hedge funds. 

Meanwhile, investors could also leverage TipRanks’ other valuable tools to know about analysts’ recommendations, investor sentiment, and insider signal to make an informed investment decision.

Built with the help of TipRanks’ Stock Comparison tool, here is the summary of how these stocks stack up on TipRanks’ valuable datasets. 

Continue to watch this space to keep a tab on hedge fund trading activities.

Disclosure 

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