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 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.
Need proof? As Chairman and CEO Warren Buffett wrote in Berkshire Hathaway's 2022 annual report: "In 58 years of Berkshire management, most of my capital-allocation decisions have been no better than so-so. Our satisfactory results have been the product of about a dozen truly good decisions."
Berkshire's "satisfactory results" happen to be a stock that generated compound annual growth of almost 20% since 1965. The S&P 500 delivered compound annual growth of not quite 10% over the same span.
And so, without further ado, here are five notable top stock picks from the billionaire class. In each case, the billionaire below initiated a substantial position or added to an existing one. If you're wondering why mega-cap tech and communication services names are rallying so hard in 2023, well, buying pressure on the part of billionaires is at least part of the equation. Four of the following five stocks are from those high-flying sectors.
Stake values and portfolio weights are as of June 30, 2023. 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.
- Billionaire investor: David Tepper (Appaloosa Management)
- Stake value: $93.1 million
- Percent of portfolio: 1.7%
Apple (AAPL) may have lost some steam in August but it was still a fine second-quarter stock pick. And Q2 just happens to be when David Tepper, owner of the NFL's Carolina Panthers, made his move.
Appaloosa Management – Tepper's West Palm Beach, Florida-based hedge fund with $13.8 billion in assets under management (AUM) – initiated a position of 480,000 shares in AAPL in the second quarter. Happily for Tepper and his clients, the iPhone maker's stock rose nearly 18% between March 31 and a late-July peak.
And while it's true Apple may have stumbled of late, shares were still up by a third for the year-to-date through mid-August. Besides, it's not like Tepper went all-in on the name. With a value of $93.1 million as of June 30, AAPL accounted for only 1.7% of Appaloosa's portfolio value – or its 18th largest holding.
Tepper amassed an estimated net worth of $18.5 billion by making well-timed bets, so it will be interesting to see what he does with the AAPL stake moving forward. As one of the best stocks of the past 30 years, Apple has more than proven itself as a great buy-and-hold bet.
- Billionaire investor: Stephen Mandel (Lone Pine Capital)
- Stake value: $271 million
- Percent of portfolio: 2.5%
Anyone wondering whether Nvidia (NVDA) stock can keep rallying should be encouraged by the fact that Stephen Mandel's Lone Pine Capital hedge fund initiated a stake in the chipmaker in the second quarter.
Mandel didn't build an estimated net worth of $3.6 billion by being late to the party. So it's notable that the billionaire's Greenwich, Connecticut-based fund ($17.1 billion in AUM) opened a position of 641,649 shares – worth $271 million as of June 30 – in Q2.
It's certainly understandable if Mandel is kicking himself for not buying the stock sooner. Thanks to Nvidia's dominance in the market for chips that power the servers behind general artificial intelligence (AI), NVDA shares have nearly tripled this year.
But then most investors who jumped on the NVDA bandwagon only recently have missed out on tremendous gains. Nvidia ranks as one of the best stocks of the past few decades. Indeed, a mere $1,000 invested in Nvidia stock 20 years ago would today be worth a small fortune today.
- Billionaire investor: Daniel Sundheim (D1 Capital Partners)
- Stake value: $172.5 million
- Percent of portfolio: 3.3%
Daniel Sundheim's D1 Capital Partners has made quite a name for itself during its five short years of existence. The New York hedge fund began trading with "only" $5 billion in capital. Today, D1 boasts more than $27.5 billion in AUM.
Along the way, Sundheim built an estimated net worth of $2.9 billion. In a nod to his precocious success, some wags call Sundheim the LeBron James of investing. Take a look at D1's equity portfolio, however, and another famous billionaire comes to mind.
Sundheim in Q2 initiated a sizable position in Visa (V), which happens to be one of Warren Buffett's favorite stocks (and the only name on our list that isn't a mega-cap tech stock.) Indeed, Berkshire Hathaway (BRK.B), of which Buffett serves as chairman and CEO, has owned shares in the operator of the world's largest payments network since 2011.
As for D1 Capital, it purchased 726,478 shares worth $172.5 million as of second quarter's end. At 3.3% of the portfolio, Visa is the fund's 15th largest holding.
Happily for Sundheim's clients, analysts see plenty of upside ahead for Visa stock. Wall Street gives shares a consensus recommendation of Buy, with high conviction, according to S&P Global Market Intelligence.
- Billionaire investor: Philippe Laffont (Coatue Management)
- Stake value: $1.8 billion
- Percent of portfolio: 8.8%
Philippe Laffont accumulated an estimated net worth of $6.9 billion in part by having good timing. Such skills were certainly on display in the second quarter when Laffont's Coatue Management hedge fund ($47.9 billion AUM) upped its stake in Microsoft (MSFT) by a whopping 67%.
MSFT, a Buy-rated Dow Jones stock, went on to gain 25% between March 31 and the middle of August.
Coatue, which has owned MSFT since the third quarter of 2021, held 5.3 million shares worth $1.8 billion as of June 30. With a portfolio weight of 8.8%, MSFT is the New York hedge fund's second largest holding after Nvidia.
If nothing else, Laffont finds himself in good company. Microsoft is by far the most popular name among hedge funds' favorite blue chip stocks. Thanks in part to help from Laffont, hedge funds were net buyers of MSFT to the tune of almost 8 million shares in Q2.
Microsoft has certainly been a great long-term holding. Anyone who invested $1,000 in Microsoft stock 20 years ago would be very happy with their returns today.
- Billionaire investor: Chase Coleman III (Tiger Global Management)
- Stake value: $2.5 billion
- Percent of portfolio: 20.6%
It should come as no surprise that yet another billionaire investor bet big on yet another mega-cap tech stock in the second quarter of 2023. After all, all that buying pressure had to come from somewhere.
Chase Coleman III, with an estimated net worth of $8.5 billion, is bouncing back in 2023 after a couple of lousy years. His Tiger Global Management hedge fund ($58.5 billion AUM) followed a down 2021 by losing a reported 56% in 2022.
The New York-based hedge fund was up a reported 16% through the end of May, helped by a mighty rebound in some of the tech stocks that sank it in years past.
And no holding counts for a larger weight in Tiger Global's portfolio than Meta Platforms (META). Coleman, who has owned the Facebook parent since 2016, upped his hedge fund's stake by 14%, or 1.1 million shares, in Q2. With 8.6 million shares worth $2.5 billion as of June 30, META accounts for more than a fifth of Tiger Capital's portfolio.
META stock has more than doubled so far in 2023, having gained 35% during the second quarter alone.
Dan Burrows is Kiplinger's senior investing writer, having joined the august publication full time in 2016.
A long-time financial journalist, Dan is a veteran of SmartMoney, MarketWatch, CBS MoneyWatch, InvestorPlace and DailyFinance. He has written for The Wall Street Journal, Bloomberg, Consumer Reports, Senior Executive and Boston magazine, and his stories have appeared in the New York Daily News, the San Jose Mercury News and Investor's Business Daily, among other publications. As a senior writer at AOL's DailyFinance, Dan reported market news from the floor of the New York Stock Exchange and hosted a weekly video segment on equities.
Once upon a time – before his days as a financial reporter and assistant financial editor at legendary fashion trade paper Women's Wear Daily – Dan worked for Spy magazine, scribbled away at Time Inc. and contributed to Maxim magazine back when lad mags were a thing. He's also written for Esquire magazine's Dubious Achievements Awards.
In his current role at Kiplinger, Dan writes about equities, fixed income, currencies, commodities, funds, macroeconomics, demographics, real estate, cost of living indexes and more.
Dan holds a bachelor's degree from Oberlin College and a master's degree from Columbia University.
Disclosure: Dan does not trade stocks or other securities. Rather, he dollar-cost averages into cheap funds and index funds and holds them forever in tax-advantaged accounts.
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