In an era where investors are predisposed to geopolitical unrest because of Russia’s invasion of Ukraine, escalating tensions in the Middle East and the ongoing power rivalry between US and China, it is imperative to adopt more diversified and flexible investment strategies. Diversification is a viable option for investors to help insulate portfolios, especially during times of economic recession and geopolitical unrest.
Warren Buffett, in his recent annual letter, mentioned that his sprawling conglomerate Berkshire Hathaway possesses the largest net worth among all American businesses, amounting to around 6% of the combined net worth of all S&P 500 companies. The conglomerate’s stock has surged approximately 16% in 2024, more than double the S&P 500’s return, following a similar 16% increase in 2023 and the market value has gone up to $900 billion. Warren Buffett’s investment philosophy is against the common practice of over diversification. He has emphasized enough on the importance of quality over quantity in investment choices and suggested a deep conviction and understanding of a few chosen companies for significant health creation.
Looking forward to 2025, investors, in view of diversification, may allocate funds to assets such as bonds, Public Provident Fund, gold, real estate and bank deposits that are more secure investment alternatives. The 60/40 portfolio of stocks and bonds needs to be modernized as the unprecedented spike in inflation and interest rates in 2022 clobbered stocks and bonds. Therefore, investors might contemplate reallocating 10% portion from 60% of which is allocated for stocks to secure asset classes offering higher yields such as banks are offering 5% to 5.5% on high yield accounts.
Analysts have predicted continued acceleration in S&P 500 earnings, forecasting 3.9% year-over-year growth in Q1, followed by a further increase of 9% in Q2 of 2024. And a substantial growth of 20.8% in earnings has been witnessed in the technology sector, driven by the ongoing surge in artificial intelligence stocks such as NVIDIA Corporation (NASDAQ:NVDA) with a remarkable increase of 265% in revenue for Q4.
Some of the best diversified stocks to invest in based on hedge funds’ assessments are Amazon.com, Inc. (NASDAQ:AMZN), Berkshire Hathaway, Inc. (NYSE:BRK-B), and Alibaba Group Holding Limited (NYSE:BABA). For this, we decided to take a look the 12 best diversified stocks to invest in.
To compile the list of the best diversified stocks to invest in, we filtered companies listed on the New York Stock Exchange and Nasdaq having multiple product lines and several revenue streams. The stocks were then ranked according to their hedge fund sentiment data which was taken from Insider Monkey’s database of 933 best hedge funds at the end of Q4 last year. The ranking was based on the ascending order of the number of hedge fund investors in each stock and then the top 12 best diversified stocks were selected for investment purposes.
Number of Hedge Fund Holders: 55
Honeywell International Inc. (NASDAQ:HON) is a diversified manufacturing and technology company headquartered in Charlotte, North Carolina. It operates through four business segments including aerospace, building technologies, performance materials and technologies and safety and productivity solutions.
Honeywell International Inc. (NASDAQ:HON) has been known to maintain a consistent dividend payment record since 1986 and therefore it has achieved an honor to be part of those companies that have increased their dividend each year at least from the past 32 years. According to the fiscal Q4 2023 Earnings Call Transcript of Honeywell International Inc. (NASDAQ:HON), $8.3 billion of capital out of which $3.7 billion has been allocated to share repurchases, $1 billion to CapEx, $700 million to M&A, and $2.9 billion to dividend payouts. 2024 is projected to be a promising year for Honeywell International Inc. (NASDAQ:HON) with sales anticipated to range between $38.1 billion and $38.9 billion reflecting an organic sales growth range of 4% to 6% for the year.
Honeywell International Inc. (NASDAQ:HON) consistent dividend growth and financial strength positions itself as one of the best diversified stocks and an attractive option for investors seeking for unswerving income streams from investments. Out of 933 best hedge funds from Insider Monkey’s database in Q4 of 2023, Honeywell International Inc. (NASDAQ:HON) had 55 hedge fund holders and Phill Gross and Robert Atchinson’s Adage Capital Management has the biggest stake in the company with 1.4 million shares worth $297.2 million.
Number of Hedge Fund Holders: 56
Warner Bros. Discovery, Inc. (NASDAQ:WBD) is a prominent American multinational conglomerate in the mass media and entertainment industry headquartered in New York City. Warner Bros. Discovery, Inc. (NASDAQ:WBD) follows the legacy of constant reinvention by committing to innovation, inclusion and offering a vast portfolio. Recently, Warner Bros. Discovery, Inc. (NASDAQ:WBD) ended its proposed merger deal with Paramount Global (NASDAQ:PARA), CNBC reported, citing people familiar with the situation.
In Q4 of 2023, Warner Bros. Discovery, Inc. (NASDAQ:WBD) has successfully achieved the objective of attaining stability and solid footing and set itself on a trajectory for expansion which is evident by the Q4 2023 Earnings Call Transcript of Warner Bros. Discovery, Inc. (NASDAQ:WBD) in which President and Executive Officer David Zaslav has expressed his gratitude:
Our top priority this year was to get this company on solid footing and on a pathway to growth, and we’ve done that. We said we would be less than 4 times levered, and we are. We paid down $5.4 billion in debt for the year for a total of more than $12.4 billion since the deal closed. We’re now at 3.9 times and expect to continue to de-lever in 2024. We’ve significantly enhanced the efficiency of the organization with a long runway still to go. We said we were going to generate meaningful free cash flow, a key KPI for our leadership and company, and we’ve exceeded our goal with $6.2 billion for the year.
As per Insider Monkey’s database of Q4 in 2023, Warner Bros. Discovery, Inc. (NASDAQ:WBD) held 56 hedge funds from a databank of 933. Natixis Global Asset Management’s Harris Associates is the biggest position holder of the company with 79.5 million shares valued at $904.8 million.
Along with Amazon.com, Inc. (NASDAQ:AMZN), Berkshire Hathaway Inc. (NYSE:BRK-B), and Alibaba Group Holding Limited (NYSE:BABA), Warner Bros. Discovery, Inc. (NASDAQ:WBD) is one of the best diversified stocks to invest in.
Number of Hedge Fund Holders: 62
3M Company (NYSE:MMM) is an American multinational conglomerate with headquarters in St. Paul, Minnesota. It operates through the following segments: Safety and Industrial, Transportation and Electronics, Health Care and Consumer.
According to Q4 2023 Earnings Call Transcript of 3M Company (NYSE:MMM), they have exceeded the earnings and cash flow targets despite a 3% decline in organic sales owing to the weak markets like consumer retail and electronics. The company has reported to have achieved a margin growth excluding restructuring expenses resulting in earnings of $9.24 per share a 30% surge in free cash flow, and a remarkable 123% conversion rate. Adding further, they have reduced net debt by $2 billion or 17% and returned $3.3 billion to shareholders in the form of dividends. It has recently appointed William Brown as CEO. Also, Barclays has upgraded 3M Company (NYSE:MMM) to overweight from equalweight and raised the price target to $126 from $111 as of March 19.
3M Company (NYSE:MMM) is one of the best diversified stocks to invest as it is financially sound due to its ability to deleverage and regularly pay out dividends to shareholders. As per Q4 2023 database of Insider Monkey, 3M Company (NYSE:MMM) had 62 hedge fund holders from best recorded hedge funds of 933 and Dmitry Balyasny’s Balyasny Asset Management is the largest shareholder of the company with 2.7 million shares worth $289.8 million.
Number of Hedge Fund Holders: 63
Comcast Corporation (NASDAQ:CMCSA) is a media, entertainment and communications company that was founded by Ralph J. Roberts in 1963 and is headquartered in Philadelphia, PA. The company operates through various segments, including Cable Communications, Cable Networks, Broadcast Television, Filmed Entertainment, Theme Parks and Sky. Comcast Corporation (NASDAQ:CMCSA) engages in the provision of video, internet and phone services.
As per the Q4 2023 Earnings Call Transcript, Comcast Corporation (NASDAQ:CMCSA) anticipated to start strong in 2024 if we reflect back on its consistent financial performance in 2023 with a strategic focus on diverse growth opportunities including broadband, business services, mobile, theme parks, studios and Peacock that collectively contributed to the growth in revenue by 8% and accounted for 55% of total revenue.
Comcast Corporation (NASDAQ:CMCSA) is one of the best diversified stocks and as per Insider Monkey’s database of 933 hedge funds, Comcast Corporation (NASDAQ:CMCSA) accounts for 63 hedge fund holders with Jean-Marie Eveillard’s First Eagle Investment Management as the biggest shareholder of the company with 32 million shares worth $1.4 billion.
Along with Amazon.com, Inc. (NASDAQ:AMZN), Berkshire Hathaway Inc. (NYSE:BRK-B), and Alibaba Group Holding Limited (NYSE:BABA), Comcast Corporation (NASDAQ:CMCSA) is one of the best diversified stocks to invest in.
Number of Hedge Fund Holders: 81
Johnson & Johnson (NYSE:JNJ) is an American multinational, headquartered in New Brunswick, New Jersey, that specializes in pharmaceuticals and medical technologies. The company operates through the following segments: Consumer Health, Pharmaceutical and MedTech. On March 15, Johnson & Johnson's (NYSE:JNJ) cell therapy, Carvykti, for treating a specific form of blood cancer at an earlier stage got unanimous support for authorization by the advisers to the US Food and Drug Administration, Reuters reported.
The unwavering commitment of Johnson & Johnson (NYSE:JNJ) to innovation while emphasizing on global reach, strategic acquisitions, sustainability and provision of healthcare solutions is evident in the Q4 2023 Earnings Call Transcript of Johnson & Johnson (NYSE:JNJ), as highlighted by the Chairman and CEO, Joaquin Duato himself:
2023 was a remarkable year for Johnson & Johnson in becoming a two sector company focused on innovative medicine at MedTech, we strengthened our position as an innovation powerhouse. We breakthrough science and transformative technology, we innovate across the entire patient pathway in ways no other company can. And as we share at our Enterprise Business Review, we have a stronger growth margin profile and are more focused and agile than ever before, which is what you see with today’s results. I’m particularly proud of our Q4 results with innovative medicine operational sales, excluding the COVID-19 vaccine, growing by 9.5% at MedTech adjusted operational sales growing by an impressive 9.1%. For the full year, we delivered strong and sustained performance with 9% operational sales growth excluding the COVID-19 vaccine and 10.8% adjusted operational earnings per share growth. These results reflect the breadth and competitiveness of our portfolio.
According to the Insider Monkey’s database of 933 hedge funds, Johnson & Johnson (NYSE:JNJ) is one of the best diversified stocks that accounts for 81 hedge fund holders as per their track record. And Ken Fisher’s Fisher Asset Management is the largest shareholder of the company with 6.4 million shares having worth of $995.3 million.
Number of Hedge Fund Holders: 85
Exxon Mobil Corporation (NYSE:XOM) established in 1999 as a result of a merger between Exxon Corporation and Mobil Corporation. It is a US-based oil and gas company known for its global presence and diversified operations across the energy sector.
As per the Q4 2023 Earnings Call of Exxon Mobil Corporation (NYSE:XOM), 2023 was an outstanding year with $36 billion of earnings, strong cash flows and a 15% return on capital. Which implies that they have witnessed more than double earnings in 2023 as opposed to in 2019.
Exxon Mobil Corporation (NYSE:XOM) had made notable changes and significant progress that is reflected in their profitability through divestment of less strategic operations and significant cost reductions. In November last year, it completed the acquisition of Denbury for $4.9 billion.
Insider Monkey’s database of 933 best hedge funds show that Exxon Mobil Corporation (NYSE:XOM) has a share of 85 hedge funds in its record. And Jean-Marie Eveillard’s First Eagle Investment Management is the biggest shareholder of the company with 13.2 million shares having net worth of $1.32 billion.
Number of Hedge Fund Holders: 89
The Walt Disney Company (NYSE:DIS) is a US-based multinational mass media and entertainment conglomerate headquartered in Walt Disney Studios Complex in Burbank, California. It operates across these divisions: Media Networks, Parks, Products and Experiences, Studio Entertainment and Direct to Consumer and International.
In its fiscal Q1 2024 earnings call transcript, The Walt Disney Company (NYSE:DIS) has approved an additional dividend and has initiated a stock repurchase program of worth $3 billion as part of its strategy to maximise shareholders value. That makes it a compelling choice to make for investors from the list of best diversified stocks to invest in. The Walt Disney Company (NYSE:DIS) reported adjusted diluted EPS of $1.22 and revenue of $23.6 billion for the fiscal Q1 ended Dec. 30.
As per Q4 of 2023, it has held 89 hedge fund holders in the Insider Monkey’s database of total 933 best hedge funds record. And Nelson Peltz’s Trian Partners is the largest position holder of The Walt Disney Company (NYSE:DIS) with 32.3 million shares valued at $2.92 billion.
Along with Amazon.com, Inc. (NASDAQ:AMZN), Berkshire Hathaway Inc. (NYSE:BRK-B), and Alibaba Group Holding Limited (NYSE:BABA), The Walt Disney Company (NYSE:DIS) is one of the best diversified stocks to invest in.
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Disclosure: None. 12 Best Diversified Stocks To Invest is originally published on Insider Monkey.
