What the Biggest Investors Are Buying Going Into 2025 – With Trump and the Federal Reserve in Mind

With significant macroeconomic events ranging from elections to central bank moves shaking up the market, Wall Street’s biggest investors are reshuffling their portfolios and playing aggressively for 2025.

According to Goldman Sachs, the hedge fund community has generally gotten the election-related trade right, targeting cyclical stocks that were expected to benefit from the turnaround that followed President-elect Donald Trump’s victory last month. The investment bank published its findings after analyzing the portfolios of 697 hedge funds with total equity positions worth $3 trillion.

Specifically, professional traders have increased their exposure to financial stocks to the largest weighting in at least 15 years, according to Goldman data. That has proven to be a winning strategy, as bank stocks have surged since Election Day, in part on expectations that the new administration will roll back a raft of government regulations.

The financial sector stocks that saw the biggest increases in hedge fund holdings in the third quarter included insurers Everest Group and W R Berkley Corp., stockbroker Intercontinental Exchange, and financial firms Raymond James Financial and Rithm Capital, according to Goldman.

Daniel Sundheim’s D1 Capital added positions in Bank of America in the third quarter, making it one of the fund’s top investments. Ole Andreas Halvorsen’s Viking Global had US Bancorp, Visa and Progressive as its largest positions.

Billionaire investor Stanley Druckenmiller built a significant position in regional banks and made clinical genetic testing company Natera his largest position last quarter — two bets that have enjoyed a boost since Trump’s election.

Energy stocks

Energy producers were another group of stocks that became popular among hedge funds betting on Trump’s return to the White House. Energy companies are expected to benefit from the president-elect’s promised easing of environmental regulations and his support for the crypto industry, which has huge energy demands.

VerityData looked at the top 10 positions of “fundamental” hedge funds, or managers that disclose between 10 and 300 investments worth $100 million or more. They found that Constellation Energy saw the biggest increase in high-confidence hedge fund holdings, including purchases from Coatue Management and Lone Pine Capital.

Energy companies Vistra and Talen Energy also gained new popularity among these professional traders. Lone Pine Capital and Third Point held Vistra among their top positions as of late September.

Investing in Chinese Companies

Big investors have also returned to the Chinese market as stocks there continue to rise, according to Goldman. Hedge funds began to turn to the emerging market in September after the government signaled a series of stimulus measures aimed at reviving growth and avoiding a prolonged stagnation in the world’s second-largest economy. David Tepper of Appaloosa Management, who told CNBC he is buying “everything” related to China because of the latest government support, more than doubled his position in Temu (PDD Holdings) in the third quarter.

A quarter of hedge funds now own at least one Chinese ADR stock, the highest level since 2021, according to Goldman. Michael Burry, known for predicting the subprime mortgage crisis before the 2008 global financial crisis, has increased his stakes in JD.com, Alibaba and Baidu, while also adding a hedge to his sizeable positions in Chinese internet companies.

Other big moves

Warren Buffett’s Berkshire Hathaway created a new $550 million position in Domino’s Pizza last quarter. The pizza chain fits into the conglomerate’s long-standing investments in processed foods and fits Berkshire’s value investing philosophy.

Baupost’s Seth Klarman acquired a $195 million stake in Dollar General last quarter, making it the fund’s eighth-largest holding. The retailer, which serves mostly rural areas, has struggled this year and was forced to cut its sales and profit forecasts.

David Einhorn, who believes the stock market is at a career high, recently took a mid-cap position in agricultural equipment maker CNH Industrial.