Fortunately, you don't need a lot of money to invest in stocks. After all, investors range from small individual investors to giant institutions such as mutual funds and hedge funds.
If you are an individual investor, you can follow the "smart money" since these institutions are required to make periodic filings with the Securities and Exchange Commission. It's an interesting exercise, although you shouldn't blindly follow their lead just because they have been plowing money into a stock.
With that caveat, it's time to see where they're putting their money to work.
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Procter & Gamble
Bridgewater Associates, founded in 1975 and now with about $150 billion of assets under management, has become one of the largest hedge funds in the world. That makes its position in Procter & Gamble (PG 0.03%) notable.
As of June 30, the institutional investor owned more than 6.7 million shares valued at over $970 million. Bridgewater ramped up its ownership last year and during the first quarter of 2022. At the end of 2020, it owned 2.7 million shares. The institutional shareholder trimmed its stake by roughly 76,000 shares in the most recent quarter, but the stock remains its largest holding, accounting for more than 4% of its portfolio.
Procter & Gamble sells everyday products such as shampoo, razors, toothbrushes and toothpaste, laundry detergent, diapers, and paper towels, meaning its sales don't fluctuate much with the economic cycle. This should provide comfort, given that many observers predict economic growth will slow. P&G has a stable of popular brands such as Head & Shoulders, Gillette, Tide, Luvs, and Pampers. In the company's latest fiscal year, which ended June 30, adjusted sales increased by 7%.
The stock will also appeal to dividend-seeking investors. The board of directors has increased payments annually for 66 straight years, making it a Dividend King.
Warby Parker
New York-based investment firm D1 Capital Partners, which manages $30 billion in assets, continues to have confidence in Warby Parker's (WRBY 2.65%) prospects despite the stock's roughly 70% slump since it began trading in September 2021. By comparison, the S&P 500 lost just 3% during this period.
An early investor, it had 8.2 million shares at the time the stock started trading, increasing this to 13.4 million at the end of 2021. D1 continued adding shares this year, owning 14.9 million shares at the end of the first quarter, the same number the institutional investor owned at the end of the second quarter.
The eyeglass and contact designer and seller has built strong customer loyalty. It has also grown revenue at a nice clip -- a roughly 21% annualized rate from 2019 to 2021. However, during that time, Warby Parker went from breakeven to a loss of $144.3 million. For the first half of 2022, the company's loss widened to $66.3 million from $20.4 million.
Although D1 has shown patience, I would advise taking a pass on Warby Parker until the company, with its unusual business, shows it can generate sustainable profitability.
On the other hand, Procter & Gamble, founded in 1837, has shown staying power. The company's sales have proven dependable. And Procter & Gamble has built an impressive track record of raising dividends. That makes this a good stock to hold over the long haul.
