3 Stocks Hedge Funds Scooped Up in Q1

If you aren’t familiar with quarterly 13F filings, they are a quarterly report that needs to be filed by all institutional investment managers with at least $100 million in assets under management. The goal here is to provide transparency and allow all market participants to see what big funds are doing every quarter. While 13F reports are filed up to 45 days after the end of a quarter and might not be useful for short-term trading, they can provide valuable insights about what areas of the market are receiving major inflows and outflows.

While retail investors should understand that 13F filings can potentially be misleading, it’s still interesting to see what investing icons like Warren Buffett, Stanley Druckenmiller, and David Tepper were up to in the previous quarter. Let’s take a look at several notable stocks that hedge funds and institutional investors scooped up in Q1.

Aon PLC (NYSE:AON)

Warren Buffett reduced his stake in quite a few different positions for Berkshire Hathaway last quarter, but one of his notable buys was this high-quality insurance brokerage, Aon PLC. It’s a leading global provider of insurance and reinsurance brokerage and human resource solutions and a company that is poised to benefit as the economy recovers from the impacts of the pandemic. Aon recently reported strong Q1 earnings results that saw the company’s total revenue increase 10% to $3.5 billion, including organic revenue growth of 6%. Investors should also be impressed by the company’s free cash flow from Q1, which increased by 91% year-over-year to $532 million.

This is a company that is always looking for ways to grow via savvy purchases, and Aon has completed over 455 acquisitions over the last 20 years. It’s worth noting that Aon is currently awaiting regulatory approval to purchase Willis Towers Watson PLC for roughly $30 billion, which will result in creating the world’s largest insurance brokerage. This is a risk management giant that is poised for even more expansion, and a vote of confidence from Mr. Buffett makes it all the more intriguing.

Citigroup (NYSE:C)

We know that the financial sector has been very strong in 2021, and it’s clear that institutional buying was part of the reason why. Legendary investor Stanley Druckenmiller’s Duquesne Family Office added a new position in this diversified financial services company, and perhaps you should consider adding shares too. Citigroup provides a wide range of financial services to customers all over the world including consumer banking and credit, corporate and investment banking, securities brokerage, trade and securities services, and wealth management.

This stock is worth a look for several reasons, including a strong rebound in the economy, consumer loan activity picking up again, and the company’s exposure to emerging markets like Asia and Latin America. Keep in mind that higher interest rates and rising inflation tends to favor the banking sector, which is probably a big reason why Mr. Druckenmiller wanted to add over 2 million shares of Citigroup in Q1. Citigroup stock offers investors a 2.63% dividend yield at this time and is up over 28% year-to-date.

Qualcomm (NASDAQ:QCOM)

David Tepper, who is widely considered one of the most successful hedge fund managers ever, added to his Qualcomm position for his investment company Appaloosa Management in Q1. While tech stocks are still quite vulnerable at the moment, this major semiconductor company is a great choice for investors that want to gain exposure to integrated solutions like processors, GPS, WiFi, basebands, and other applications that are used in so many different devices today. Qualcomm also earns royalty and licensing revenue from its intellectual property portfolio for 3G, 4G, and 5G technologies, which should continue to grow with the smartphone market.

This is a company with a lot of positives to consider right now, including Qualcomm's momentum in the handset space thanks to 5G and the role it will play in the global chip shortage. As the world’s largest wireless chip vendor, it's one of the best semi stocks to consider earning for the long term. Qualcomm reported blowout Q2 earnings that saw Q2 sales come in at $7.9 billion, an increase of 52% year-over-year. The stock has pulled back considerably from its highs earlier this year, offering an attractive entry point for investors that are looking for exposure to semis.