One way to generate investment ideas is to look at the shares that other investors are buying. This approach can highlight shares that may not be on your radar.
With that in mind, in this article, I’m going to highlight the top five shares that Hargreaves Lansdown investors bought for their accounts last week. Should you follow the crowd and buy these shares too?
The most bought stock on Hargreaves Lansdown
The most bought stock on the Hargreaves Lansdown platform last week was FTSE 100-listed investment trust Scottish Mortgage (LSE: SMT). If you’re unfamiliar with SMT, it’s a low-cost investment trust that invests in global equities. It’s very tech-focused and has large holdings in high-growth stocks such as Amazon, Tesla, and Tencent. Perhaps investors were taking advantage of the minor tech sell-off that occurred recently.
I like SMT (disclaimer: I’m a holder). I see it as a good way to get exposure to leading growth companies. There are some really exciting names – both listed and unlisted – in the portfolio including Zoom Video Communications, TransferWise, and Shopify. That said, I wouldn’t pile a lot of capital into it right now. Many of the tech stocks in the portfolio have enjoyed phenomenal runs recently. I’d wait for a pullback before buying more SMT shares.
5.8% dividend yield
In second place was FTSE 100 utility National Grid. Its shares have fallen a little recently. Perhaps Hargreaves Lansdown investors see value after the pullback.
For income investors, National Grid has appeal. While many other FTSE 100 companies have suspended or cancelled their dividends this year, NG has increased its dividend. Currently, the prospective yield on offer is about 5.8%.
It’s worth pointing out, however, that dividend coverage is not high. This means that National Grid is not the safest dividend stock in the UK.
Slow and steady returns
In third place was another investment trust, City of London. I’ve covered CTY quite a bit in the past. It’s a UK large-cap-focused investment trust that is run in a conservative way and pays regular dividends. Top holdings currently include British American Tobacco, Unilever, and Diageo – all of which are reliable dividend payers.
For those seeking large-cap exposure and regular dividends, I see CTY as a solid pick. It’s never going to set the world on fire, but it should provide slow and steady returns.
The fourth most bought stock on Hargreaves Lansdown was electric vehicle manufacturer Tesla, which is listed in the US. It seems investors were buying the dip. Tesla stock recently crashed more than 30% in around a week.
I’ve made my view on Tesla stock quite clear recently. I believe it’s a very-high-risk play. I wouldn’t be buying TSLA at current prices.
Under-the-radar growth trust
Finally, in 5th place was Monks Investment Trust. This is run by Baillie Gifford (which also runs Scottish Mortgage). Like SMT, it’s a growth-focused trust that has a global remit. Its holdings are very different to SMT, however. For example, at 31 July, it only had 2% allocated to Tesla, whereas SMT had about 14%.
I like the look of this trust. There are some top names in the portfolio including the likes of Microsoft, Mastercard, and Alphabet (Google). Of the top five stocks that Hargreaves Lansdown investors bought last week, this is the stock I’d be most inclined to buy today.
Edward Sheldon owns shares in Scottish Mortgage Investment Trust, Microsoft, Mastercard, Alphabet, Unilever, Diageo, and Hargreaves Lansdown. John Mackey, CEO of Whole Foods Market, an Amazon subsidiary, is a member of The Motley Fool’s board of directors. Suzanne Frey, an executive at Alphabet, is a member of The Motley Fool’s board of directors. Teresa Kersten, an employee of LinkedIn, a Microsoft subsidiary, is a member of The Motley Fool’s board of directors. The Motley Fool UK owns shares of and has recommended Alphabet (A shares), Amazon, Mastercard, Microsoft, Shopify, Tesla, and Zoom Video Communications. The Motley Fool UK has recommended Diageo, Hargreaves Lansdown, and Unilever and recommends the following options: long January 2021 $85 calls on Microsoft, short January 2021 $115 calls on Microsoft, short January 2022 $1940 calls on Amazon, and long January 2022 $1920 calls on Amazon. Views expressed on the companies mentioned in this article are those of the writer and therefore may differ from the official recommendations we make in our subscription services such as Share Advisor, Hidden Winners and Pro. Here at The Motley Fool we believe that considering a diverse range of insights makes us better investors.