We recently compiled a list of the 10 most widely held stocks by hedge funds. In this article, we’ll take a look at where Taiwan Semiconductor Manufacturing Co., Ltd. (NYSE:TSM) stands compared to other widely held stocks.
Two 25-point cuts may be the most likely outcome.
As the last trading day of September approaches, we’re getting a lot of questions about the market. On September 30th, Dana D’Auria, co-CIO and group president of Envestnet Solutions, appeared in an interview with Yahoo Finance to talk about financial markets.
Dauria believes that employment statistics are a major concern at the moment. Inflation has subsided, so investors should keep an eye on the jobs report, as well as other data points such as GDP and consumer confidence. He suggested that the Fed would need to begin cutting rates more significantly to ensure a soft landing, and that a recessionary situation was unexpected.
September, like October, is notoriously volatile, and with elections just 35 days away, the situation could be slightly different or even more chaotic. Dauria said the 50 basis point rate cut is a catch-up from July, and expecting a 50 basis point rate cut in November is borderline questionable.
Overall, she believes the market is overshooting and may need to settle for two 25 basis point cuts by the end of 2024. He reiterated that the job market is critical and investors need to get out of their comfort zone and invest in non-employment areas. cash opportunity. Investors concerned about lower-risk options may consider stocks in defensive sectors, which inherently have lower volatility.
The market is expanding
Wall Street is coming off a strong end to September and the third quarter, with stocks experiencing their best September in more than a decade. On September 30th, Kevin Gordon, director and senior investment strategist at Harles Schwab, appeared in an interview with Yahoo Finance to discuss market theory.
Gordon believes that utility and defensive sector stocks have caught up to tech stocks amid the AI boom, compared to financials at the end of 2023. However, it acknowledged that sectors such as industrials, financials and materials performed relatively well. , we refer to this as a market expansion case.
In terms of market breadth, most sectors are trending upward. Despite the quality bias that investors may have toward certain stocks, nearly 81% of S&P 500 index constituents have experienced an uptrend. Gordon said large-cap blue-chip stocks will continue to perform well despite the volatility and the Fed’s decision. When it comes to small-cap stocks, he thinks some may struggle a bit, especially when it comes to earnings growth.
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our methodology
To come up with the top 10 stocks most widely held by hedge funds, we looked at Insider Monkey’s database tracking over 900 hedge funds as of Q2 2024. The top 10 stocks most widely held by hedge funds are ranked in ascending order. About their hedge fund sentiment.
Why are we interested in stocks that hedge funds invest in? The reason is simple. Our research shows that by mimicking the top stock picks of the best hedge funds, you can outperform the market. Our quarterly newsletter strategy selects 14 small- and large-cap stocks each quarter and has returned 275% since May 2014, outperforming the benchmark by 150 percentage points (Learn more ).
Close-up of a complex network of integrated circuits used in logic semiconductors.
Taiwan Semiconductor Manufacturing Co., Ltd. (NYSE:TSM)
Number of hedge fund holders: 156
Taiwan Semiconductor Manufacturing Co., Ltd. (NYSE:TSM) ranks #8 on the list of stocks most widely held by hedge funds. TSMC is a semiconductor manufacturing and design company. Large manufacturing companies make chips for big technology companies like Nvidia and AMD.
In the second quarter of 2024, the company’s revenue increased 13.6% quarter-over-quarter due to increased demand for nanometer technology. Taiwan Semiconductor Manufacturing Co., Ltd. (NYSE:TSM) expects revenue from AI chips to increase at a compound annual growth rate (CAGR) of 50% by 2027. By 2024, TSMC expects its revenue to grow 20%, also due to factors such as: Demand for chips used in artificial intelligence.
TMSC expects its 2024 capital expenditure budget to be between $30 billion and $32 billion. Of this, 70% to 80% of the budget is allocated to advanced process technology, nearly 20% to specialty technology, and 10% to advanced packaging, testing, and volume production. In addition, TMSC has established a joint venture, European Semiconductor Manufacturing Company (ESMC), with Robert Bosch GmbH, Infineon Technologies AG and NXP Semiconductors NV, and launched a semiconductor factory in Dresden, Germany. The fab will be the EU’s first pure-play Fin-FET-capable foundry.
Despite the country’s macro headwinds and geopolitical turmoil, analysts are bullish on the stock, with a one-year median price target of $209 implying a 20% upside from current levels. . Overall, TSM was held by 156 hedge funds at the end of Q2 2024, with total stakes reaching $21.28 billion.
Diamond Hill Capital said the following about Taiwan Semiconductor Manufacturing Co., Ltd. (NYSE:TSM) in its Q2 2024 investor letter:
“On an individual holdings basis, top returns in the second quarter included long positions in Alphabet, Taiwan Semiconductor Manufacturing Co., Ltd. (NYSE:TSM), and Microsoft.Semiconductor maker Taiwan Semiconductor (TSMC)’s fundamentals remain strong as demand for the company’s chips continues to grow, especially as trends in machine learning and cloud computing gain further momentum. ”
Overall, TSM ranks 8th on the list of stocks most widely held by hedge funds. While we see TSM’s potential as an investment, we believe AI stocks have a better chance of delivering higher returns in a shorter period of time. If you’re looking for AI stocks with more promise than TSM, but trading at less than 5x earnings, check out our report on the cheapest AI stocks.
Read next: $30 trillion opportunity: 15 humanoid robot stocks to buy, according to Morgan Stanley and Jim Cramer, says NVIDIA has ‘become a wasteland.’
Disclosure: None. This article was originally published on Insider Monkey.
