Many billionaires fly under the radar. But 13F filings offer a clue as to what assets the ultra-rich are scooping up.
The most recent release last month, showcased three key stocks that billionaire money managers snapped up. All four are profitable and time-tested stocks within the Dow Jones Industry Average, so it’s no surprise they are being bought on the dip with great enthusiasm by those with thick wallets.
Jim Simons’ Renaissance Technologies and John Overdeck’s and David Siegel’s Two Sigma Investments were two other massive buyers of Apple stock.
This pick among billionaires isn’t a surprise. After all, Apple continues to be a trusted brand with a loyal customer base. Although the tech giant is known for its iPads, Macs, and iPhones (representing 50% of the U.S. smartphone market this past quarter), Apple has big plans for the future. It aims to transition toward subscription services, which could boost the company’s operating margins.
Of all the FAANG stocks, Apple is the slowest growing and is still somewhat pricey. While the company’s short-term growth potential is modest, there’s no denying a place for a few AAPL shares in every investor’s portfolio. Shares of AAPL will likely bounce back, and long-term investors will be rewarded when they do.
Of 42 analysts covering the stock, the consensus price target is $188.24 per share, implying significant upside.
With all the talk of record high inflation and interest rates, a recession in the United States is probable. When recessions hit, the consumer has less discretionary income so Visa (NASDAQ: V) may not be the first stock you think to buy.
But billionaires think differently and they see that the company has built a near impenetrable moat and may be on sale. Visa has a presence in over 200 countries and is the preferred choice for over one hundred million merchants. It also enjoys more than half of all credit card network purchase volume.
It’s no surprise then that investors like Gabe Plotkin of Melvin Capital purchased 1.49 million-shares.
Analysts consensus is $265.30 per share for Visa, implying around 29% upside potential.
Microsoft (NASDAQ: MSFT) is one of the just two publicly-traded companies with the AAA credit rating from Standard & Poor’s. This rating offers investors confidence in the company’s servicing and ability to repay debts.
Based on the company’s track record, millions of investors hold shares of MSFT, including Jeff Yass of Susquehanna International and Ken Fisher of Fisher Asset Management, both of whom purchased around one million shares recently.
Growth is forecast to slow, but Microsoft continues to dominate the desktop market, controlling around 75% of the market share globally. Microsoft also has big plans concerning the cloud and Azure, which should continue to reward patient investors.
Microsoft analysts believe the company’s hare price has upside of 37% to $262 per share at the time of research.
Should You Buy These Stocks?
Buying shares because someone else does may not be the best strategy. But when billionaires bet big it’s certainly worth turning your attention to understand why. You can see that fundamental drivers influenced their decisions. In other words, these stocks are on sale based on discounted cash flow forecasts and billionaires are snapping up the bargains.
Like always, buy only what you can afford with the mentality of riding out the storm. As Warren Buffet said, “If you are not willing to own a stock for ten years, do not even think about owning it for 10 minutes.”