Knowing which stocks are owned by large and successful investors is a great place to find new investment ideas. After all, if this group of investors owns a stock, they are probably well-informed, as they have far more resources for researching stocks than individual investors.If you look at what stocks top hedge funds own, it's clear that many companies are betting on them. snowflake (snow 0.98%) To do well.
Four of the 16 hedge funds analyzed by The Motley Fool own Snowflake. This may not seem like a high percentage, but the only stocks that were more common were some of the biggest technology companies, including: apple, meta platformor alphabet. Therefore, Snowflake's inclusion on this list is quite noteworthy.
But does that mean you should buy Snowflake now? Let's check it out.
Snowflake plays a key role in AI
Snowflake is a major player in the data infrastructure space. The company's cloud products provide tools that allow users to efficiently store any type of data on their cloud computing provider of choice. Once a data pool is established, users can use it for tasks such as performing data science, feeding various applications, selling data sets on the Snowflake Marketplace, and training artificial intelligence (AI) models. You can The latter has many hedge funds interested in the stock, as Snowflake's products are a key part of AI adoption.
It's no secret that behind every great AI model is a huge dataset. Therefore, the ability to continuously collect data with products like Snowflake is key to ensuring that AI models are useful. For example, if a company runs an advertising campaign based on data from several months ago, using the most up-to-date information may not yield the best results. The same is true for the large-scale language models that power generative AI platforms like ChatGPT and Google Gemini.
With Snowflake's prominent place in the world of AI, it's no wonder it's in the hedge funds of many tech billionaires. But prices have also come down in recent months.
You can buy stocks for less than what a billionaire would have paid for them.
Investors can learn more about the assets held by hedge funds through the 13F filings that companies must file with the SEC if they own more than $100 million in stock. These are filed 45 days after the end of each company's fiscal quarter, so they're actually a bit delayed.
The Motley Fool's research into various tech hedge funds uses each fund's fourth-quarter holdings, and Snowflake's stock has fallen in value since then. Snowflake announced its earnings results on February 28, and its stock price plummeted nearly 20% the next day. Since the stock price is down more than 30% from its 2024 high and more than 45 days have passed since the start of the year, many of the hedge funds that held Snowflake stock likely did not experience a decline in the stock price. It is no exaggeration to say so.
Snowflake's stock price was sold off due to the abrupt retirement of longtime CEO Frank Slootman and a rather weak outlook for fiscal 2025 (ending January 31, 2025). Still, Snowflake's new CEO was a great pick, and management guided him to increase Snowflake's product revenue by 22%. These are far from reasons to dump stocks, and they do present investors with a buying opportunity.
At current levels, Snowflake's price-to-sales (P/S) valuation is near the lowest in the stock's history. This is important for companies, which are set to make leaps and bounds as AI becomes more mainstream.
With that in mind, I wouldn't be surprised if some of these hedge funds added to Snowflake stock during the first quarter. That information won't be revealed until mid-May. So if you want to get into stocks before the general public knows what billionaires are doing, you should consider buying Snowflake now.