In this piece, we will take a look at the ten best high volume stocks to buy according to hedge funds. If you want to skip our coverage of the latest stock market news, then you can take a look at the 5 Best High Volume Stocks To Buy According to Hedge Funds.
With the first quarter of 2024 firmly behind us, the second quarter is seeing the return of the bulls vs bears that we grew accustomed to last year. Before artificial intelligence took the market by storm, investors and analysts were pulling their hair out as they analyzed and tried to guess the future of the American economy. Back then, inflation was much sharper than it is now, and as stock market investors were still coming to terms with rapid interest rate hikes, they were uncertain about what lay ahead in America's economic future and how they should position their portfolios.
Now, these same trends are raising their heads in the second quarter of 2024. While investors' thirst for rapid stock market percentage gains was quenched with artificial intelligence, stocks nevertheless paired back their gains in April after the latest set of inflation data hit the news wires. This data showed that the consumer price index, one of the economy's inflation indicators, rose by 0.4% in March and 3.5%, slightly outpacing earlier estimates. The annual growth ended up being the fastest in six month, and while the data wasn't even remotely as striking as the peak inflation readings of 2022, it nevertheless shattered some hopes of a respite from the Federal Reserve in the form of early interest rate reductions.
The aftermath of this data led to widespread implications. High volume stocks are those that are trading above their average reading and they can indicate several things. For our latest set of macroeconomic data, such volume stocks can indicate investor sentiment about those firms that do not stand to benefit from rates being higher for longer. The data's implication for the stock market saw stocks naturally tumble as inflation ended up beating expectations for the third consecutive month. The impact on the market was bifurcated across sectors, as while the S&P 500 fell by 1%, the index's real estate sector was sharply hit as the stocks fell by 4%. The technology dominated NASDAQ 100 and NASDAQ Composite were down by 1% as well, and other sectors that outpaced the broader stock market indexes include small cap stocks and utilities.
Trading stocks based on their volume is part of a toolkit dubbed technical trading. This sees investors focus on purely market based indicators such as share price movements, averages, and volatility. Courtesy of the copious amounts of data that are available to the everyday investor, finding stock volumes simply requires following a screener. Current volumes, i.e. the number of shares that are trading hands at the moment are compared to average historical volumes to see if anything is out of the ordinary.
Stocks with high trading volumes can see investor interest for a variety of reasons. In the aftermath of the latest inflation data, this was somewhat visible as well. For instance, roughly two hours before markets closed on the day of the data release, shares of the mega retail giant Walmart Inc. (NYSE:WMT) gained roughly 90 basis points. Their average volume at the time was 8.1 million, which was less than half of the average volume of 19 million. This trend was also visible in the shares of Target Corporation (NYSE:TGT), with the 1.2 million shares trading hands less than half the average volume of 3.8 million. On the flip side, roughly 2.8 million Prologis, Inc. (NYSE:PLD) were trading hands, which was almost in line with the historical volume of 3.1 million. Shares of another real estate company, Equinix, Inc. (NASDAQ:EQIX) painted a similar picture with the current trading volume being 75% of the historic trading volume.
What these facts make clear is that broader market news such as inflation data tends to cause volume spikes in some sectors and leaves other sectors alone. As for real estate, here's what Third Avenue Management had to say about the high volume stock Prologis in its fourth quarter of 2023 investor letter:
Prologis (a U.S.-based Industrial and Logistics REIT) held a capital markets forum, where the management team reviewed the evolution of the business and highlighted their “customer focus”. The team also covered several material value-drivers, including: (i) the “loss-to-lease” opportunity within the existing portfolio with market rents approximately 60% above in-place leases, thus representing nearly $3.0 billion of incremental cash flow3 that can be realized as leases renew, (ii) a 12k acre landbank that can accommodate more than 200 million square feet of additional properties, which is increasingly being used to deliver datacenters given the higher capital values relative to industrial properties, and (iii) its Essentials segment, including the addition of rooftop solar panels at many facilities, which currently account for 555 Megawatts (“MW”) of installed capacity (and generates $40 million of operating profits) but is expected to comprise 7000 MW of capacity by 2030 (and generate approximately $800 mm of annual profits).
With these details in mind, let's take a look at the high volume stocks that hedge funds are buying. A couple of notable names are Oracle Corporation (NYSE:ORCL), JPMorgan Chase & Co. (NYSE:JPM), and QUALCOMM Incorporated (NASDAQ:QCOM).
10 Best High Volume Stocks To Buy According to Hedge Funds
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Our Methodology
To make our list of the best high volume stocks, we ranked the 40 stocks with the highest three month trading volume by the number of hedge funds that had bought the shares during Q4 2023.
For these best high volume stocks, we used hedge fund sentiment. Hedge funds’ top 10 consensus stock picks outperformed the S&P 500 Index by more than 140 percentage points over the last 10 years (see the details here). That’s why we pay very close attention to this often-ignored indicator.
10 Best High Volume Stocks To Buy According to Hedge Funds
10. Morgan Stanley (NYSE:MS)
Number of Hedge Fund Investors In Q4 2023: 56
Average 3 Month Trading Volume: 8.68 million
Morgan Stanley (NYSE:MS) is one of the biggest investment banks in the world. The firm, along with investment banking peer Goldman Sachs felt the heat from a New York court in April 2024 when the court ruled that former CBS investors could sue the banks as the banks underwrote securities but dumped the shares themselves to avoid losses.
As of Q4 2023 end, 56 out of the 933 hedge funds covered by Insider Monkey's research had bought and owned Morgan Stanley (NYSE:MS)'s shares. Ken Fisher's Fisher Asset Management was the firm's biggest investor due to its $1.8 billion stake.
Morgan Stanley (NYSE:MS) joins JPMorgan Chase & Co. (NYSE:JPM), Oracle Corporation (NYSE:ORCL), and QUALCOMM Incorporated (NASDAQ:QCOM) in our list of the high volume stocks that hedge funds are buying.
Truist Financial Corporation (NYSE:TFC) is an American regional bank headquartered in Charlotte, North Carolina. March 2024 proved to be a crucial month for the firm as its multi billion dollar insurance business sale reached a successful end after the buyer raised $6.1 billion through bond financing.
By the end of December 2023, 59 out of the 933 hedge funds part of Insider Monkey's database had held a stake in the firm. Truist Financial Corporation (NYSE:TFC)'s largest hedge fund investor is Ken Griffin's Citadel Investment Group as it owns $402 million worth of shares.
Occidental Petroleum Corporation (NYSE:OXY) is a sizeable oil and gas exploration and production firm headquartered in Houston, Texas. After a five month delay, it announced in April 2024 that operations in the Gulf of Mexico will now resume after a pipeline leak forced it to stop some operations.
Insider Monkey scoured through 933 hedge fund portfolios for their fourth quarter of 2023 shareholdings and found that 66 were the firm's investors. Occidental Petroleum Corporation (NYSE:OXY)'s biggest investor in our database is Warren Buffett's Berkshire Hathaway through its $14.5 billion investment.
Shopify Inc. (NYSE:SHOP) is a well known Canadian eCommerce retailer headquartered in Ottawa, Canada. The firm saw favorable attention from Baird in April 2024 when the firm increased Shopify Inc. (NYSE:SHOP)'s share price target to $87 from $85 on the back of heightened optimism for Spotify's subscription plan and other business initiatives.
For their final quarter of 2023 investments, 68 out of the 933 hedge funds covered by Insider Monkey's research had bought and owned Shopify Inc. (NYSE:SHOP)'s shares. Peter Rathjens, Bruce Clarke, and John Campbell's Arrowstreet Capital owned the largest stake which was worth $1.6 billion.
NIKE, Inc. (NYSE:NKE) is the well known athletic apparel company headquartered in Beaverton, Oregon. The shares are rated Buy on average, and the average analyst share price target is $110.19.
69 out of the 933 hedge funds part of Insider Monkey's Q4 2023 database had invested in the firm. NIKE, Inc. (NYSE:NKE)'s biggest investor among these is Ken Fisher's Fisher Asset Management as it holds 9.8 million shares that are worth $1 billion.
Oracle Corporation (NYSE:ORCL), NIKE, Inc. (NYSE:NKE), JPMorgan Chase & Co. (NYSE:JPM), and QUALCOMM Incorporated (NASDAQ:QCOM) are some top hedge fund high volume stock picks.
