Hedge-Fund Favorites Rose 23% — Again
Posted: October 20, 2026
October 19, 2026 (Maple Hill Syndicate) – Fifty years ago, the top talent in the investing profession worked for mutual funds, banks and pension funds. In the 1980s many top investors fled to hedge funds, seeking more excitement and higher pay.
Gurufocus.com maintains a screen of stocks popular with hedge funds. Two years ago, I started an annual series of columns in which I pick a few stocks from that list.
The first year, my hedge-fund-favorites picks returned 23.6%. My list from a year ago returned 23.3% — almost identical. Both lists beat the Standard & Poor’s 500 Total Return Index, which gained 15.3% and 15.9% in the two years.
Bear in mind that my column results are hypothetical and shouldn’t be confused with results I obtain for clients. Also, past performance doesn’t predict the future.
I’m ready to set off on another hedge-fund-favorites quest. If my picks rise 23% again, I’ll be thrilled. Anything over 18% would be delightful. No guarantees. Here goes.
CNX Resources
Two of the largest and most successful hedge funds in the US are Renaissance Technologies and Bridgewater Associates. Government filings show that both bought CNX Resources Corp. (CNX) shares in the second quarter. I don’t know if they still own the stock, since both firms trade actively.
CNX, based in Canonsburg, Pennsylvania, produces natural gas from shale formations in Ohio, West Virginia and Pennsylvania. Natural gas prices have been in the doldrums for a long time, and CNX lost money in six of the past ten years.
It’s revived lately, as witness its 21% return on stockholders’ equity. I consider 15% good and 20% excellent. Natural gas is supplying some of the energy for power-hungry data centers.
Raymond James
Based in St. Petersburg, Florida, Raymond James Financial Inc. offers stock and bond brokerage and investment management. It has shown a profit 38 years in a row. It, too, has been owned this year by both Renaissance and Bridgewater.
The stock is medium priced. It usually sells for about 15 times earnings, and the current multiple is 14. In the past decade, the company has averaged better than 12% annual revenue growth, with profits growing faster than revenue. The stock has quadrupled in the past ten years.
Plains All American
Plains All American Pipeline LP (PAA), based in Houston, Texas, transports oil and gas through about 19,000 miles of pipelines in the U.S. and Canada. It’s a master limited partnership, so owning it might complicate your tax return.
If that doesn’t intimidate you, I think the stock deserves consideration. It sells for only seven times the past four quarters’ earnings, and only 0.34 times revenue. The company has been profitable in nine of the past ten years. Its return on equity is running at 27% lately.
Nvidia
For years, I’ve declined to buy Nvidia Corp. (NVDA) shares because they were too expensive for a cheapskate value investor like me. Meanwhile, in the past ten years, the stock rose 13,143% and my growth-stock brethren enjoyed the fruits.
Nvidia, the leading designer of computer chips for artificial intelligence, cryptocurrency mining and gaming, still looks expensive by many measures. But it now sells for only 27 times the past four quarters’ earnings, and only 14 times analysts’ estimate of the next four quarters’ earnings.
Goodheart-Willcox
A small-company stock that looks appealing to me is Goodheart-Willcox Co. (GWOX) of Tinley Park, Illinois, which publishes textbooks. Ever hear of “Modern Refrigeration and Air Conditioning?” No? How about “Modern Welding?”
Many of Goodheart-Willcox’s textbooks are oriented to trades, and I think trade schools will be increasingly popular in the next few years. The company’s 31% return on equity is impressive, and the stock sells for about 11 times earnings.
Last Year
The standouts last year from my selections among hedge-fund favorites were Taiwan Semiconductor Manufacturing Co. (TSM) and Caterpillar Inc. (CAT). They rose 46% and 42% respectively.
I was lucky on Caterpillar. The reason I selected it wasn’t the reason it rose. I liked it because I thought a weak dollar would help its exports. But it rose mainly because it supplies gas turbines and generators for data centers.
As for my other three selections: Berkshire Hathaway Inc. (BRK.B) was up 7%, Walmart Inc. (WMT) 9% and JP Morgan Chase & Co. 13%.
Disclosure: I own Taiwan Semiconductor and JP Morgan Chase personally and for most of my clients. I own Berkshire Hathaway for most of my clients, and call options on it in a hedge fund I run. Katharine Davidge, my wife and a portfolio manager at my firm, owns Nvidia personally and for clients.
John Dorfman is chairman of Dorfman Value Investments in Newton, Massachusetts. His firm or clients may own or trade securities discussed in this column. He can be reached at jdorfman@dorfmanvalue.com.