It’s always interesting to see what billionaire investors are doing with their money. Of course, the average person can’t match the gains they’ve made by simply following every stock they buy, but it’s still helpful and productive to know what they’re doing.
For the average person, there are big risks to following in the footsteps of the billionaires, hedge funds and top-flight advisers listed below. After all, the research resources these billionaires or institutions have and their close connections to insiders and others can give them unique insight into their stock choices. But in any case, examining which stocks billionaires are buying with their money — and which they are selling — could be instructive for retail investors. After all, the rich are getting richer for a reason.
Here are 10 of the top stocks chosen by billionaires, each of which has at least one billionaire — whether an individual, a hedge fund or an adviser — who owns a significant and/or increased stake in it. In most cases, the shares of these companies are held by multiple billionaire investors or their investment companies, and they include both the most popular blue chips and some relatively obscure companies.
Either way, one thing’s for sure: These stocks are favored by so-called smart money, since billionaires don’t play games with their own money.
Market cap: $25 billion
Billionaire Investor: Silver Point Capital
Percentage of his portfolio: 46.3%
Utilities typically pay generous dividends to allow investors to sleep well at night. However, PG&E (ticker symbol: PCG) is riskier than a utility in this traditional sense.
If the company’s name sounds familiar to anyone, it’s probably because the company is facing a massive legal battle after its equipment was involved in several deadly forest fires. In fact, the company did not emerge from bankruptcy protection until last summer — a filing that was necessary because it had faced an estimated $30 billion in debt. Still, Silver Point Capital has held shares in the utility since 2018, building up a sizable position along the way. PG&E now accounts for more than 46 per cent of the fund’s portfolio value.
Wall Street analysts are bullish on the company, giving it a “buy” rating. And the company’s stock has certainly had a reassuring performance, up 37% over the past three months.
Market cap: $443.9 billion
Billionaire investor: Odey Asset Management Group
Percentage of his portfolio: 42.1%
Visa (stock code: V) by hedge funds, mutual funds, analysts and retail investors, and the reason why the company has such a big attraction, should be very easy to understand: as the world’s largest payment processing company, Visa in using global digital mobile payments and other no cash transactions of explosive growth is in a unique position.
Warren Buffett, whose Berkshire Hathaway owns a $2 billion stake in Visa, believes in the company. Visa is also highly trusted by Odey Asset Management Group, a London-based hedge fund that has a whopping 42.1% of its portfolio allocated to the stock. That’s a huge weight even in the most concentrated portfolios, but Odey holds more than 110 stocks. The fund’s second largest position is Barrick gold, which accounts for just 5.2 per cent of its portfolio.
What’s remarkable is how quickly Odey is adding to his Visa holdings. After Visa made up just 0.5 per cent of Odey’s portfolio in the second quarter of last year, Odey added 1.5 million shares in the third quarter, boosting its stake by more than 9,000%.
Market cap: $423.8 billion
Billionaire investor: Cullinan Associates
Percentage of his portfolio: 27.4%
Wal-Mart (WMT) is one of the beneficiaries of a new lifestyle under the Novel Coronavirus pandemic, and that’s good news for investors who own a large chunk of the world’s largest retailer. Cullinan Associates, a Louisville, Ky., consulting firm with $1.5 billion under management, continues to add to its already sizeable stake in Wal-Mart.
After buying a further 95,760 shares of Wal-Mart, Cullinan Associates as its top pick makes up 27.4% of its overall stock portfolio, compared to 4.3% for No. 2 Coca-Cola (ticker symbol: KA).
Market cap: $80.28 billion
Billionaire investor: Himalaya Capital Management
Percentage of his portfolio: 26.6%
Himalaya Capital Management, a Seattle-based hedge fund, has a very concentrated portfolio, owning just four companies. So while Facebook (FB: FB) accounts for 26.5% of the company’s equity portfolio, it’s only in second place — Micron Technology (MU: MU) accounts for more than 40%. The company’s other two holdings are Bank of America (ticker symbol: BAC) and Class C shares of Google parent Alphabet (ticker symbol: GOOG).
But Himalayan Capital Management is the biggest investor in Facebook, buying a further 722,100 shares, or 118%, in the third quarter, more than doubling its stake in its portfolio.
The hedge fund’s choice is understandable: The analysts predict 19.5% annual earnings growth over the next three to five years and call Facebook a buy, which should support a price-to-earnings multiple of 28 times.
Market cap: $1.2 trillion
Billionaire investor: Altarock Partners
Percentage of his portfolio: 25.0%
Alphabet (GOOGL), the parent company of Google, is one of the few tech stocks to drive the U.S. stock market higher in 2020, and according to Wall Street analysts, it will continue to do so.
The search leader, which is running neck and neck with Facebook, is a digital advertising duopoly that is accelerating both inside and outside the US. With long-term growth expected to be close to 16% a year over the next three to five years, the stock has a consensus “buy” rating on Wall Street.
Altarock Partners, a hedge fund based in Beverly, Mass., first bought Alphabet shares in 2019 and has held them ever since. In the third quarter of last year, Altarock added to his stake in Alphabet, which now accounts for 25% of his portfolio’s total value.
Market cap: $1.6 trillion
Billionaire investor: Spark Investment Management
Percentage of his portfolio: 20.0%
In the third quarter of last year, there was no lack of billionaire investors selling shares of Amazon (AMZN), but for every seller, there was a buyer, and Spark Investment Management was one of them.
Amazon accounts for nearly 20% of the New York hedge fund’s $1.7 billion in assets under management and is now the hedge fund’s second-largest holding after Facebook. Facebook is also a new investment for the fund, while Spark has also made investments in technology stocks such as Saifetime, Netflix and Square. Under the novel coronavirus epidemic, Amazon has been benefiting from people having to stay at home.
Market cap: $1.6 trillion
Billionaire investor: Skye Global Management
Percentage of his portfolio: 19.9%
Almost all institutional investors will naturally choose to Microsoft (stock code: MSFT) to join their portfolios, the software giant’s Windows operating system is still the world’s most popular operating system, and the company has fully understood how to corporate and retail customers through sales of cloud-based services (including its Office productivity suite) to promote regular income growth.
One notable big investor is Skye Global Management, a New York-based hedge fund with $1.4 billion in assets under Management. The fund specialises in technology stocks and Microsoft is its largest holding, accounting for almost 20 per cent of its total portfolio value. Skye increased its stake in Microsoft by 66%, or 1.5 million shares, in the third quarter, bringing its total stake to 3.4 million shares. Skye first bought Microsoft stock in 2017.
Other companies with the largest positions in Skye include Facebook, Alphabet, the parent company of Google, and Amazon.
8. Berkshire Hathaway
Market cap: $186.4 billion
Billionaire Investors: Check Capital Management
Percentage of his portfolio: 17.5%
For Berkshire Hathaway (BRK.A, BRK.B), investing in the company can be summed up in one sentence: “If you can’t beat ’em, join’ em.” After all, there are few people who can compete with the company’s chairman and CEO, Warren Buffett, to generate above-market returns over a long period of time. So Check Capital Management, a hedge fund based in Costa Mesa, Calif., has hitched a ride on the Oracle of Omaha.
Check Capital increased its stake in Berkshire by 3% to 43,987 shares in the third quarter. The fund now owns 1.3 million shares of the company, making it the second-largest holding in the fund’s portfolio, at 17.5%. But in practice, the fund’s largest holdings are Berkshire Hathaway call options, which make up 46 per cent of the portfolio. As a result, the fund is likely to continue to increase its stake in Berkshire in the coming quarters.