Riding the coattails of the so-called smart money isn’t a bad strategy. Just don’t blindly follow the stock buys and sells of billionaire investors. You need to do your own due diligence into whether the shares are worth putting your money at risk. Just because there are stocks the elite are buying doesn’t mean they should be in your portfolio. However, some of them are solid picks!
Although companies are no longer allowed to give material information to a favored few, the investing gurus still have better access to management, industry insiders, and investment tools. Still, you don’t need all that to make yourself wealthy by investing in stocks. Look at it as a way to narrow down the vast universe of stocks into a more manageable set of ideas. If elite investors are buying—or selling—shares, you may want to follow along.
Just make sure you don’t need the money you want to put into play to pay for bills or emergencies. With a three- to five-year minimum investment horizon, these are stocks billionaires are buying. Piggybacking on them might be a successful strategy too.
Disney (NYSE:DIS) used to have the Midas touch. Everything it did turned to gold and windfall profits. These days the entertainment giant has whatever the opposite of that would be. It can’t make money on any movie it produces and it’s held up by its theme parks, though they are suffering from declining attendance. It’s propped up the business by hiking prices and offering deep discounts at atypical times to lure families back.
The problem stems from Disney’s entry into the so-called culture wars. It took on the state of Florida that resulted in its special improvement district being dissolved while executives revealed they wanted to undermine traditional family values in its movies. Even CEO Bob Iger admitted the studio had “gone too far” in pushing an agenda over quality filmmaking.
The downfall of Disney stock led billionaire investor Nelson Peltz to resume his activist role. His Trian Fund Management increased its stake more than 400% to amass 32.8 million shares worth almost $2.7 billion. Peltz wants two seats on Disney’s board of directors to get the House of Mouse back on track.
He tried this previously but relented when Iger said he wanted to turn Disney around. Now, people perceive Iger as contributing to the problem. The looming proxy battle, though, caused DIS stock to soar 16% higher. Investors might want jump in too as Peltz gains support from other activist investors for his efforts. The stocks the elite are snatching up are numerous, but this one is worth your time and attention.
Meta Platforms (META)
Although a number of smart-money investors pared their holdings in Meta Platforms (NASDAQ:META), a handful made substantial additions to their positions. Stephen Mandel at Lone Pine Capital and Third Point Capital’s Daniel Loeb established new stakes in the owner of Facebook, Instagram, and WhatsApp. The former bought 2.8 million shares; the latter, 1.1 million.
Meta investors should look at why they’re buying and ignore CEO Mark Zuckerberg sell 628,000 shares over the past month. As investing great Peter Lynch once noted, insiders can sell for any number of reasons, but they only buy for one. Zuck’s sales are just noise. Who knows? Maybe he needs a new jacuzzi.
Meta Platforms owns three of the biggest social media sites. It has 3.96 billion monthly active users across its products, a 7% increase from last year. With an estimated 4.9 billion social media users worldwide, Meta influence over what people see online is enormous.
The market took notice of Meta’s strength. The stock is up more than 160% in 2023. It was included in the so-called Magnificent 7 group of stocks that accounted for almost all the gains of the S&P 500 this year.
Although Meta’s head first dive into the metaverse continues to weigh on the company, everything else is on fire. With advertising revenue rebounding, Meta enjoyed some of its strongest operating margins in recent quarters. It makes META stock one investors will want to buy too. When it comes to the stocks the elite are picking up, this one stands out among the others.
Considering the uptick in ad dollars spent, billionaire investors selling Alphabet (NASDAQ:GOOG)(NASDAQ:GOOGL) is a surprise. Google advertising revenue jumped 9.5% in the latest quarter to $59.6 billion. YouTube ads were up more than 12% to $7.9 billion while search was 11% higher to $44 billion. Only the Google Network (AdSense, etc.) saw a decline.
Alphabet is also one of the Mag 7 stocks but its shares are up only 48% year to date. Of course, that’s still better than the 18% gain by the broad market index. Also, it has further to run.
The tech giant is a formidable foe across numerous segments including cloud services, streaming, and more recently, artificial intelligence (generative AI model Gemini is the “largest, most capable and most general” AI system. Alphabet is taking advantage of the recent turmoil at OpenAI. Its Pixel 8 Pro smartphone becomes the first smartphone to be powered by it.). It claims its
Maybe Seth Klarman at Baupost Group just wanted to take some profits from his Alphabet gains when he reduced his holdings by 7% this quarter. Dodge & Cox cut their position by almost 14% while David Rolfe at Wedgewood Partners almost completely sold off his otherwise small stake in the company.
I’m not sure I’d follow their lead here. I’d probably join David Tepper at Appaloosa Management who increased his holdings 19%, or by some 2.75 million shares. There are tons of stocks the elite are buying, and this is one you should toss into your portfolio.
On the date of publication, Rich Duprey did not hold (either directly or indirectly) any positions in the securities mentioned in this article. The opinions expressed in this article are those of the writer, subject to the InvestorPlace.com Publishing Guidelines.