11 stock picks that billionaires love

Billionaire investors are busy scooping up bargains in the current bear market. The following 11 stocks are just some of their favorite names.

  • By Dan Burrows,
  • Kiplinger
  • Facebook.
  • Twitter.
  • LinkedIn.
  • Print

No, you can't get rich simply by copying billionaires' moves, but there's still something irresistible about following their top stock picks.

After all, the billionaires we're about to talk about have larger-than-life reputations when it comes to investing other rich people's money. Meanwhile, their resources for research, as well as their intimate connections to insiders and others, can give them unique insight into their stock picks.

Studying which stocks they're chasing with their capital (or which stocks the billionaires are selling off, for that matter) can be an edifying exercise for retail investors.

There's a reason the rich get richer, for one thing. But it's also helpful to see where billionaires sometimes make mistakes – at least in the short term. No matter how successful they've been in the past, all investors are fallible. Those who've amassed multibillion-dollar personal fortunes have merely been right more often than they've been wrong.

Here are 11 of the most recent top stock picks from the billionaire class. In each case, the billionaire below has initiated a substantial position or added to an existing one. Several of these investments are popular blue-chip stocks, while others keep a much lower profile. Some of these names might even surprise you.

Stake values and portfolio weights are as of June 30. Data is courtesy of S&P Global Market Intelligence, YCharts, WhaleWisdom.com, Forbes and regulatory filings made with the Securities and Exchange Commission, unless otherwise noted. Stocks are listed by weight in the selected billionaire investor's equity portfolio, from smallest to largest.


11. Colgate-Palmolive

  • Billionaire investor: Third Point (Dan Loeb)
  • Stake value: $159.1 million
  • Percent of portfolio: 3.8%

Dan Loeb built his estimated $4.2 billion fortune in part by telling corporate management teams what he thinks they need to hear. So it's understandable if the C-suite at Colgate-Palmolive (CL) was less than thrilled to learn that Loeb initiated a stake in the consumer products giant during the second quarter.

Loeb's Third Point hedge fund, with $27.5 billion in assets under management (AUM), bought nearly 2 million CL shares valued at more than $159 million as of June 30. The stake, with a 3.8% weighting in Third Point's portfolio, instantly made Colgate one of the New York hedge fund's top 10 holdings.

It's also entirely possible that Loeb has no activist designs at all. Shares in the classic defensive stock are outperforming the broader market so far in 2022. And few names can beat CL when it comes to dividend growth. Indeed, Colgate-Palmolive, a member of the S&P 500 Dividend Aristocrats, has increased its payout for 60 consecutive years and counting.

10. Amazon.com

  • Billionaire investor: Philippe Laffont (Coatue Management)
  • Stake value: $437.4 million
  • Percent of portfolio: 5.3%

Amazon.com (AMZN) stock lost 35% of its value in Q2, and while hedge funds were net sellers of the e-commerce giant, some billionaires spied a bargain.

Philippe Laffont, with an estimated net worth of $6.5 billion, certainly did. His Coatue Management ($73 billion AUM) hedge fund boosted its AMZN stake by 35%, or 1.1 million shares. The New York fund, which has owned Amazon stock since 2009, now holds 4.1 million shares worth $437.4 million as of June 30. At 5.3% of the portfolio, AMZN is now Coatue's fourth largest position.

Rising fears of recession and its potential impact on retail spending have been weighing on AMZN all year. The market's rotation out of pricey growth stocks and into more value-oriented names has likewise done AMZN no favors.

If nothing else, the selloff has Wall Street analysts calling Amazon stock a screaming bargain buy. Laffont clearly agreed with their assessment – at least in Q2.

9. Nexstar Media Group

  • Billionaire investor: Steven Tananbaum (Goldentree Asset Management)
  • Stake value: $82.0 million
  • Percent of portfolio: 5.3%

Steven Tananbaum, founder of Goldentree Asset Management ($52 billion AUM), is best known for investing in distressed debt, but equities also catch his eye. Case in point: Nexstar Media Group (NXST).

Nexstar is the largest television station owner in the U.S., with 197 stations in 115 markets. Its stock is up around 28% for the year-to-date, beating the broader market by a whopping 44 percentage points.

In Q2, however, NXST went on sale, when shares fell almost 14% during the three months ended June 30. That's when Tananbaum, with an estimated net worth of $2.4 billion, pounced. His New York hedge fund boosted its stake by 81%, or 226,152 shares, to bring its total holdings up to 503,524 shares.

The position, which Goldentree initiated in the third quarter of 2021, was worth $82 million as of June 30. At 5.3% of the portfolio, NXST is the hedge fund's sixth largest holding.

8. Snowflake

  • Billionaire investor: Daniel Sundheim (D1 Capital Partners)
  • Stake value: $254.5 million
  • Percent of portfolio: 6.0%

Snowflake (SNOW) was so promising when it made its stock market debut in 2020 that it even found a place among Warren Buffett's stocks picks.

Sadly, 2022 has been particularly brutal for pricey growth stocks, and SNOW has been no exception. Shares lost about two-thirds of their value from Dec. 31, 2021 through mid-June. SNOW was either seriously on sale – or a falling knife.

Daniel Sundheim built his estimated net worth of $3.2 billion by making such distinctions, and so far he appears to have been right where SNOW is concerned.

His D1 Capital Partners hedge fund ($40.1 billion AUM) increased its stake by 36%, or 492,057 shares, in Q2. The New York fund now holds 1.8 million shares worth $254.5 million as of June 30. At 6.0% of the portfolio, Snowflake is the fund's sixth largest holding.

Meanwhile, SNOW marked a 52-week closing low on June 13 and went on to rally by about 75% over the next two-and-a-half months or so.

7. Meta Platforms

  • Billionaire investor: Chase Coleman, III (Tiger Global Management)
  • Stake value: $724.5 million
  • Percent of portfolio: 6.1%

Chase Coleman III has been having a rough year. His Tiger Global Management ($124.7 billion AUM) hedge fund suffered one of the biggest dollar losses in industry history during the first four months of 2022, hurt by steep declines in major holdings such as JD.com (JD), Microsoft (MSFT) and Sea Ltd. (SE).

But Coleman didn't amass an estimated net worth of $10.3 billion by letting a little something like a $17 billion loss rattle his nerves. The hedge fund legend went right back to bargain shopping in the same sector that caused Tiger Global so much pain earlier this year. Indeed, the New York hedge fund upped its bet on Facebook parent Meta Platforms (META) by 15%, or 590,625 shares, in Q2.

Tiger Global now holds 4.5 million shares in the social media platform, worth $724.5 million as of June 30. At 6.1% of the portfolio – up from 3.3% in Q1 – META is the hedge fund's fifth largest investment.

6. Taiwan Semiconductor Manufacturing

  • Billionaire investor: Stephen Mandel (Lone Pine Capital)
  • Stake value: $730.4 million
  • Percent of portfolio: 6.9%

Stephen Mandel, with an estimated net worth of $3.9 billion, is betting on semiconductors in a big way. His Greenwich, Connecticut-based Lone Pine Capital ($10.6 billion AUM) hedge fund initiated a stake in Taiwan Semiconductor Manufacturing (TSM) in the first quarter of 2022 and added to it substantially in Q2.

TSM is the world's largest pure-play semiconductor foundry and a critical source of chips for the global supply chain. Shares have been hammered this year as investors fret over weakening demand and increased competition.

Mandel, for his part, appears to spot a bargain. Lone Pine boosted its position in TSM by 11%, or 953,547 shares, in Q2. The fund now holds 8.9 million shares valued at $730.4 million as of June 30.

At 6.9% of the portfolio, TSM is Lone Pine's fourth largest holding. That's quite a commitment considering that the fund had no position in the stock heading into 2022.

5. Microsoft

  • Billionaire investor: John Armitage (Egerton Capital)
  • Stake value: $1.4 billion
  • Percent of portfolio: 9.3%

Microsoft (MSFT) has long been analysts' favorite stock in the Dow Jones Industrial Average (.DJI), sporting a rare consensus recommendation of Strong Buy for more than two years.

However, as with pretty much every other mega-cap tech stock, shares have been beaten down relentlessly in 2022. The selloff in MSFT was particularly acute in Q2 – it dropped nearly 16% over that three-month period – and that was when Egerton Capital ($24.3 billion AUM) co-founder and chief investment officer John Armitage decided to make his move.

Armitage, with an estimated net worth of $2.9 billion, raised his London-based hedge fund's stake in the cloud-computing behemoth by 11%, or 573,278 shares. Egerton now holds 5.4 million shares valued at $1.4 billion as of June 30.

At 9.3% of the portfolio, MSFT is Egerton's second largest holding after Canadian Pacific Railway (CP). The fund has owned MSFT stock since the third quarter of 2015. Since then, MSFT has generated a total return (price appreciation plus dividends) of nearly 560%. The S&P 500's (.SPX) total return comes to 135% over the same span.

4. S&P Global

  • Billionaire investor: Chris Hohn (TCI Fund Management)
  • Stake value: $3.0 billion
  • Percent of portfolio: 9.4%

Chris Hohn continued to build on his fund's position in S&P Global (SPGI) during the second quarter.

Hohn, with an estimated net worth of $7.9 billion, made his fortune with The Children's Investment Fund Management. More commonly known as TCI Fund Management, the London hedge fund boasts $31.6 billion in managed securities.

TCI maintains a concentrated portfolio of just 14 stocks, so it's notable that Hohn has zeroed in on SPGI. He increased his fund's stake by another 28%, or 1.9 million shares, in Q2. That followed an 82% increase in the first quarter. With a total of 8.8 million shares worth nearly $3 billion as of June 30, SPGI is TCI's sixth largest position.

Although most investors probably know SPGI for its majority stake in S&P Dow Jones Indices, the company is also a central player in corporate and financial analytics, information and research. Bulls applaud SPGI's recent acquisition of IHS Markit, which expands its presence in environmental, social and governance (ESG) products and services.

SPGI also happens to be an equity income machine. This member of the S&P 500 Dividend Aristocrats has raised its dividend for 49 consecutive years.

3. Qorvo

  • Billionaire investor: Seth Klarman (Baupost Group)
  • Stake value: $657.1 million
  • Percent of portfolio: 9.7%

Qorvo (QRVO) makes chips and integrated modules that enable wireless and wired connectivity. It's a bet on the boom in everything from smart home and auto connections, the Internet of Things (IoT) and 5G expansion in general.

Seth Klarman built his estimated net worth of $1.5 billion in part by being early to these sorts of megatrends, so bulls will certainly be pleased with his latest moves in Qorvo stock.

Klarman's Baupost Group ($31.6 billion AUM) upped its stake yet again, this time by 4%, or 321,324 shares. That followed an 11% increase to the position in the first quarter and a 16% increase in Q4.

The Boston hedge fund, which has owned QRVO since 2017, now holds almost 7 million shares worth $657.1 million as of June 30. At 9.7% of the portfolio, QRVO is second among Klarman's top stock picks after Liberty Global Class C (LBTYK), which accounts for almost 16% of the fund.

2. Constellation Energy

  • Billionaire investor: David Tepper (Appaloosa Management)
  • Stake value: $154.6 million
  • Percent of portfolio: 9.7%

David Tepper amassed his estimated fortune of $17.3 billion in part by having great timing. And those skills were very much on display in Q2 when his Appaloosa Management ($20.7 billion AUM) hedge fund initiated a position in Constellation Energy (CEG).

Utilities are supposed to be poky and boring dividend payers. But thanks to its network of nuclear, wind, solar and hydro plants, CEG also happens to be the largest producer of carbon-free energy in the U.S.

Needless to say, the Biden administration's Inflation Reduction Act, which directs $369 billion in federal spending towards green energy, gave CEG and its peers a heck of a boost in August.

And Tepper was there for it. The owner of the NFL's Carolina Panthers bought 2.7 million shares in CEG worth $154.6 million in the three-month period ended June 30. The stock is up about 44% since that time – and has nearly doubled for the year-to-date.

At 9.7% of the portofolio, CEG is the Short Hills, New Jersey-based hedge fund's fourth largest holding.

1. Freeport-McMoRan

  • Billionaire investor: Andrew Law (Caxton Associates)
  • Stake value: $113.7 million
  • Percent of portfolio: 11.1%

Bruce Kovner, with an estimated net worth of $6.6 billion, retired from the hedge fund he founded a decade ago. But Caxton Associates still benefits from its close association with his legendary name.

Meanwhile, Kovner's successor Andrew Law is hardly a pauper himself. His own net worth is estimated at around $1 billion, thanks to his major ownership stake in Caxton ($26.7 billion AUM).

The rich get richer in part by anticipating changes in macroeconomic conditions, which would help explain why Caxton Associates initiated a position in Freeport-McMoRan (FCX) during the first quarter and then built on it in the second.

After all, commodities have always been one of investors' favorite ways to play inflation. When prices are rising at the fastest pace in four decades, adding exposure to a major metals miner like FCX just makes sense.

And make no mistake, Caxton is committed to Freeport in a big way. The New York hedge fund boosted its stake by 3%, or 127,500 shares, in Q2. That followed the purchase of 3.8 million shares in the miner during the first three months of the year.

The FCX position, worth $113.7 million as of June 30, is the fund's second largest holding after Pfizer (PFE).

  • Facebook.
  • Twitter.
  • LinkedIn.
  • Print

For more news you can use to help guide your financial life, visit our Insights page.


© 2022 The Kiplinger Washington Editors, Inc.
close
Please enter a valid e-mail address
Please enter a valid e-mail address
Important legal information about the e-mail you will be sending. By using this service, you agree to input your real e-mail address and only send it to people you know. It is a violation of law in some jurisdictions to falsely identify yourself in an e-mail. All information you provide will be used by Fidelity solely for the purpose of sending the e-mail on your behalf.The subject line of the e-mail you send will be "Fidelity.com: "

Your e-mail has been sent.
close

Your e-mail has been sent.