When hunting for stock picks, follow the funds. Like bees to honey, the latest report on new buys by the best mutual funds shows top money managers have zeroed in on giant tech stocks, led by Nvidia (NVDA), Salesforce.com (CRM), Google parent Alphabet (GOOGL) and Microsoft (MSFT).
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Top funds also did some binge-buying of Netflix (NFLX), picking up an estimated $330 million in NFLX stock.
While impressive, that pales in comparison to the more than $1 billion put into both NVDA stock ($1.3 billion) and CRM stock ($1.3 billion). Although not joining the billion-dollar club, GOOGL stock ($977 million) and MSFT ($813 million) stock also garnered large investments.
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Best Mutual Funds Invest In Tech, Medical And Financial Stocks
Top funds also pulled out their wallets for medical and financial stocks. United Health (UNH), Thermo Fisher Scientific (TMO), Anthem (ANTM) and Eli Lilly (LLY) each received large infusions of cash.
These leading institutional investors also placed large sums on big bank stocks Goldman Sachs (GS) and Morgan Stanley (MS), as well as brokerage and investments giant Charles Schwab (SCHW).GS stock was recently featured as the IBD Stock Of The Day as it was launching a breakout. GOOGL stock was similarly featured on Oct. 27.
Note: Be sure to check these Excel files, updated and published each month, to see all the stocks on the latest list of new buys and list of new sells by the best mutual funds.
GOOGL Stock Among Many Long-Term Leaders On New Buys List
The best mutual funds tend to take a long-term perspective on investments. So it's not surprising that many names on this list of new buys by top funds can also be found on IBD's Long-Term Leaders.With their track records of solid growth and earnings stability, you'll find Microsoft, Alphabet, Thermo Fisher, Adobe (ADBE) and ServiceNow (NOW) on that elite list.
And that's just scratching the surface. From the medical sector, Charles River Laboratories (CRL), West Pharmaceuticals (WST) and Catalent (CTLT) also make both lists.
Adding to the list of tech stocks, Epam Systems (EPAM), Atlassian (TEAM), ASML (ASML), Monolithic Power Systems (MPWR), Globant (GLOB), Synopsys (SNPS), Cadence Design Systems (CDNS), and Entegris (ENTG) also make the cut.
Leisure stock Pool (POOL) joins financial plays Intuit (INTU) and MSCI (MSCI) also earn a spot on both IBD Long-Term Leaders and the latest list of new buys by top funds.
CAN SLIM System Can Help
The I in CAN SLIM Investing System — institutional sponsorship — is one of the seven common traits of the best stocks in every market cycle. Since mutual funds, banks, insurance companies, pension funds and other large investors make up the bulk of all trading activity in the stock market, it's crucial to follow their enormous purchasing power.
In addition to tracking the price and volume action in stock charts to see where the big money is flowing (or fleeing), also check this monthly list of new buys by the best mutual funds together with IBD Long-Term Leaders (updated weekly).
It's one simple way to stay in sync with where top money managers are placing their long-term bets.
How To Read Buys & Sells By The Best Mutual Funds
Ever wonder if managers of the best mutual funds know something you don't? Would you like an early signal showing when institutional investors — especially the best ones — are getting in or out of certain stocks? New Buys Of Top-Performing Stock Funds and Top Funds' Latest Sells provide just that.Use the PDF and Excel files to see when companies like GOOGL stock and Nvidia that are in demand with large investors.
Updated each month, the New Buys list includes only new buys of the top 30% of stock funds ranked by 36-month performance. Companies are sorted by the highest combined Earnings Per Share (EPS) and Relative Price Strength (RS) Ratings. The number of top-performing funds that bought the stock in the latest reporting period is given.
As seen in the links above to the PDF and Excel files, the Total Mil$ Invested column shows the amount of money, in millions, the funds put into each stock. The column reflects both new positions and additions to existing ones. Prices, EPS and RS Ratings, and P/E are from the month-end close.
The Latest Sells list tallies the number of top-performing funds that were net sellers of each stock in the fund's latest reporting period. Because some funds bought the same stocks sold by others, we also looked at the total number of buyers of each stock.
Follow Matthew Galgani on Twitter at @IBD_MGalgani.
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