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All Contents © 2019The Kiplinger Washington Editors
By James Brumley, Contributing Writer
| April 18, 2019
Do you want to invest like real billionaires do?
Most billionaires obviously have much more money to burn than the average investor. And they also have enough cash in the bank to wait things out should their stock picks turn sour.
Still, given the so-called “smart money’s” resources and intimate connections with some of the companies they own, it wouldn’t be a crazy idea to study the top stocks that billionaires and high-asset hedge funds are plowing their long-term capital into. Rich people often get perpetually richer for a reason.
Here are 50 top stocks of the billionaire class. In all cases, these companies represent major holdings (anywhere between 5% and 100% of the portfolio) of at least one ultra-wealthy person or a large hedge fund. In many cases, these stock picks are heavily owned by multiple high-net-worth individuals and/or are high-conviction picks by several fund managers. And while several of these stocks are popular blue chips, others fall far off the radar of most investors.
Data is as of April 16. Individual holdings and allocations come via WhaleWisdom.com, which tracks each fund’s most recent 13F disclosure filings submitted to the SEC on a quarterly basis. Percent of holdings is as of each fund’s most recent filing. Assets under management provided by Fintel and WhaleWisdom.com. Personal net worth data provided by Forbes, BusinessInsider and Alfa Investing. Companies are listed in alphabetical order.
Market value: $34.4 billion
Billionaire investor: Philippe Laffont (Coatue Management)
Percent of holdings: 5.0%
Video games generally haven’t been of much interest to hedge fund managers. Most of these professional stock pickers don’t have a particularly great feel for the industry, and video game publisher stocks tend to be uncomfortably volatile anyway. Funds prefer at least some modicum of predictability.
However, tech-focused hedge fund Coatue Management, with $8.4 billion in assets under management (AUM), is confident enough in its read of the maturing video gaming business to make a big play on Activision Blizzard (ATVI, $45.06) – the company behind the popular Call of Duty series, World of Warcraft and Overwatch. As of the end of 2018, Coatue held a $420 million, 9 million-share stake in the game developer, making it one of the 10 top stocks in the portfolio at a 5% weight.
Coatue – led by billionaire founder Philippe Laffont – still is a net buyer too, even after the stock lost a little more than half its market value in last year’s waning months. It added nearly a quarter-million shares during the fourth quarter of 2018.
Market value: $132.4 billion
Billionaire investor: Suvretta Capital Management
Percent of holdings: 13.2%
Investors who think Adobe (ADBE, $271.43) is still just PDFs and Photoshop may want take a closer, updated look. The software company hasn’t just remained relevant – it has completely reinvented itself, becoming a business-building and web-marketing SaaS platform. But yes, it still has roots in the commercial graphics and document management world.
It’s an evolution that Suvretta Capital Management ($1.7 billion AUM) must like, given that chief investment officer Aaron Cowen has dedicated a little more than 13% of the fund’s value to a position in ADBE stock. The position has been very rewarding, by the way – Adobe shares are up more than 600% since the end of 2012 and are within sight of record highs.
Also, if Cowen’s name rings a bell, it may be because he formerly was with SAC Capital Advisors and Soros Fund Management.
Market value: $481.6 billion
Billionaire investor: Andreas Halvorsen (Viking Global Investors)
Percent of holdings: 7.5%
Alibaba (BABA, $185.78) is well-loved by professionals and amateurs alike, and for good reason. Alibaba essentially controls the eastern hemisphere’s e-commerce market, and BABA shares have been an excellent investment as a result. As the company branches out well beyond e-commerce and into other tech-centric industries, its prospects only expand.
Alibaba’s future is compelling enough, anyway, for Greenwich, Connecticut-based Viking Global Investors to add to an already major stake in the company last quarter. Norwegian-born fund chief Andreas Halvorsen, who is personally worth $3.7 billion, had the fund buy 710,192 shares during the fourth quarter of last year, bringing Viking’s position to 10.2 million shares of BABA worth about $1.9 billion. That made it the top stock in the fund’s portfolio.
Market value: $48.0 billion
Billionaire investor: Brian Higgins and Francis Biondi Jr. (King Street Capital Management)
Percent of holdings: 14.6%
Drug company Allergan (AGN, $145.41) is best known as a supplier of “Botox,” which is a bacteria specifically intended as a means of making skin look more youthful. There’s more to the pharmaceutical outfit than mere aesthetics, though. Its Vraylar is an increasingly popular treatment for schizophrenia and bipolar mania, while its Linzess is a proven therapy for irritable bowel syndrome. The rest of Allergan’s portfolio is proving just as important as Botox once solely was.
This diversified portfolio, and budding pipeline, may be drawing King Street Capital Management’s Brian Higgins and Francis Biondi Jr. – each worth $1.6 billion – so closely to Allergan. The fund, which currently has $2.2 billion in assets under management, had 14.6% of its portfolio committed to 2.4 million shares of AGN as of the final quarter of 2018. It added roughly half that stake during Q4.
Market value: $854.5 billion
Billionaire investor: Ruane, Cunniff & Goldfarb/Sequoia
Percent of holdings: 18.7%
Owning a piece of the world’s most recognized Internet search name isn’t an earth-shattering idea. Indeed, it’s difficult for any fund manager to justify ignoring Alphabet (GOOGL, $1,231.91) – the most profitable company in the business.
But some fund managers have taken on unusually large pieces of the search giant.
William Ruane and Richard Cunniff, of Ruane, Cunniff & Goldfarb ($9.1 billion in AUM), are a pair of those managers (co-founder Robert Goldfarb has retired). Ruane, Cunniff & Goldfarb owned more than 1.6 million Alphabet shares (split between its Class A GOOGL shares and Class C GOOG shares) as of the end of the most recently reported quarter, which accounted for nearly 19% of the portfolio at the time.
Retail investors may be more familiar with the mutual fund simply called Sequoia (SEQUX), which allows smaller investors to benefit from Ruane’s and Cunniff’s decades’ worth of wisdom.
Market value: $916.7 billion
Billionaire investor: Eagle Capital Management
Percent of holdings: Unknown*
Amazon.com (AMZN, $1,863.04) CEO Jeff Bezos, worth more than $150 billion at the moment, built the company from nothing to being one of the world’s biggest, with a lot of his own sweat equity. No surprise, then, that he and future-ex-wife MacKenzie Bezos were the largest shareholders as of their most recent disclosure, with their 78,818,227 shares representing a 16.1% ownership stake. Even after MacKenzie Bezos takes a quarter of the shares as part of their divorce agreement, he still will hold the biggest chunk of Amazon by a wide margin.
Beyond the founder’s sizable stake in the e-commerce giant, however, many hedge funds have Amazon among their top stocks. Eagle Capital Management managing director Ravenel Boykin Curry IV has put a hefty degree of faith in the company. He has built a roughly 924,300-share position worth nearly $1.4 billion in the portfolio, committing 5.7% of the fund’s value to Amazon.com.
Market value: $50.0 billion
Billionaire investor: Capital International
Percent of holdings: 5.3%
Technically speaking, Carlos Slim – once recorded as the world’s richest man, and still one of the wealthiest – is by the far the biggest shareholder of Latin American wireless service outfit America Movil (AMX, $15.66).
Outside of the speculators that helped bring the company from relatively humble beginnings as a private company to its full fruition, Capital International ($10.3 billion in AUM) rates as the biggest player that acquired an America Movil stake in a more conventional manner. That is, Capital International bought its 2.7 million shares in the open market, committing 5.3% of the fund’s value to the AMX position – its second-biggest holding.
Courtesy HanSangYoon via Wikimedia Commons
Market value: $40.7 billion
Billionaire investor: Prana Capital Management
Percent of holdings: 5.7%
Prana Capital Management isn’t a heavyweight within the hedge fund industry, sporting just $464 million in assets under management. But this smaller fund still stands out because it’s not afraid to take on relatively concentrated positions, and in fact embraces the very volatility that many investors aim to avoid.
American International Group (AIG, $46.74) is one of those sizable holdings, accounting for 5.7% of its portfolio – one of the fund’s five top stocks as of the end of 2018.
The insurer may forever be remembered as one of the key names that put 2008’s financial crisis into motion. Indeed, AIG shares are still nowhere near their pre-2008 levels and sold off rather heartily in 2017 and 2018.
They’re on the mend again now, however, up more than 25% from their December lows and still going strong. Prana’s recent addition of more AIG shares a couple of quarters ago is looking quite prescient.
Market value: $939.5 billion
Billionaire investor: Warren Buffett (Berkshire Hathaway)
Percent of holdings: 21.5%
It comes as no surprise that Apple (AAPL, $199.25) is as popular with the institutional crowd as it is with retail investors. It’s not only (usually) the market’s biggest and most profitable company, but it also has one of the world’s most recognized and respected brand names.
But who’s the biggest discretionary shareholder of Apple?
Warren Buffett’s Berkshire Hathaway (BRK.B), which owns almost 250 million shares of the consumer-tech giant. That stake is worth more than $50 billion, which for perspective is more than 5% of the company.
It’s not the kind of company Buffett, worth almost $85 billion, is known for picking. He has generally eschewed high-flying tech names. Apple’s place in the fabric of today’s society is undeniable even to the 88-year-old Oracle of Omaha, however … though he probably was given a nudge by Buffett’s younger protégés Ted Weschler and Todd Combs.
Market value: $288.0 billion
Billionaire investor: Lansdowne Partners
Percent of holdings: 6.3%
Berkshire Hathaway also is the biggest single shareholder of banking name Bank of America (BAC, $29.88) as well, but Buffett has not made the biggest relative bet on the nation’s second-biggest bank by assets.
Among the major funds, the U.K.’s Lansdowne Partners ($6.8 billion in AUM) is one of the most serious shareholders. It had allocated 6.2% of its portfolio to the trade, holding $425 million worth of BAC shares as of the end of last year. Big banks make up several of the fund’s top stocks, so the position is right at home.
Lansdowne has owned the stock in earnest since 2011. That said, the fund is scaling back its position in BofA, shedding more than a third of its shares during the final quarter of 2018.
Market value: $8.5 billion
Billionaire investor: John Paulson (Paulson & Co.)
Percent of holdings: 8.6%
Bausch Health Companies (BHC, $24.13), formerly known as Valeant Pharmaceuticals, needed a name change to complete the top-to-bottom overhaul. After racking up too much debt buying niche drugs only to impose price hikes that proved wildly unpopular, Valeant was forced into retreat just to save itself. The new Bausch moniker was just part of the effort to repair its tarnished image.
John Paulson, billionaire owner of hedge fund Paulson & Co. ($4.2 billion in AUM), is a believer in the revamped organization, which borrowed the respected brand name of its eyecare arm to restore credibility.
Granted, he was already a big stakeholder as of 2015, before the company completely unraveled. But despite plenty of time and reason to let go, Paulson has stuck with Bausch to build what has become a $502 million position.
Market value: $39.7 billion
Billionaire investor: Daniel Loeb (Third Point)
Percent of holdings: 28.3%
When billionaire Daniel Loeb makes a bet, he usually makes a big one. And his biggest bet right now is Baxter International (BAX, $77.62). His Third Point fund’s 28 million shares of the medical equipment outfit are collectively worth more than $2.2 billion right now; as of the fourth quarter, they made up a whopping 28.3% of the fund’s total value.
It has been a great trade for Loeb and Third Point’s investors since the $6.5 billion fund started building the position more than three years ago. BAX shares are currently more than twice their price as of the end of 2016. It has been such a good trade, in fact, that the fund manager sold more than a fifth of the position during the fourth quarter of last year and it’s still by far his biggest trade.
Loeb said a quarter ago he has no plans to sell any more Baxter shares. However, the big rally to record highs since the end of last year could prompt more profit-taking.
Courtesy Paul Sableman via Creative Commons 2.0
Market value: $3.9 billion
Billionaire investor: P2 Capital Partners
Percent of holdings: 13.0%
P2 Capital Partners (just under $1 billion in AUM) is a curious company. It looks, acts and thinks like a private equity firm, but it deals in publicly traded entities rather than illiquid outfits, exercising a penchant for small, undervalued organizations. CEO and founder Claus Jorgen Moller isn’t afraid to take on concentrated positions either, betting bigger than even most hedge funds might on one particular company.
Case in point? P2’s biggest holding right now is security and cash-transportation service name The Brink’s Co. (BCO, $79.25). As of its most recent filing, P2 owned $128 million worth of BCO shares, accounting for 13% of the P2 portfolio.
Deccan Value Investors is also a major Brinks shareholder, technically owning more shares than P2, but as a smaller portion (10.2%) of its overall portfolio.
Market value: $126.1 billion
Billionaire investor: Lyrical Asset Management
Percent of holdings: 6.8%
Lyrical Asset Management ($6.6 billion in AUM) is an unconventional mix of new- and old-school attributes. Founded in 2008 by Andrew Wellington and Jeff Keswin, its New York office juxtaposes sculptures and pinball machines, reminiscent of Silicon Valley’s hip newcomer outfits. Its investing approach is, however, a buy-and-hold strategy that limits the fund’s total trades to only a handful per year. Keswin and Wellington want to hold positions for the long haul.
Its big Broadcom (AVGO, $318.50) position, for instance, has been one of its top stocks since 2013. Its AVGO stake was one of its biggest at 6.8% of the portfolio as of its last 13F; its 1.8 million shares currently are worth $561 million.
In many ways, the pick aligns with the Lyrical’s ethos. Broadcom is one of the names ushering in the era of 5G connectivity, which makes the Internet of Things movement a reality. Yet, the telecom-tech chipmaker is largely a non-cyclical name thanks to its diverse product base. Its dividend yield of 3.5% is comparable to that of many value stocks (as opposed to growth stocks) that most buy-and-hold investors prefer.
Market value: $11.9 billion
Percent of holdings: 10.6%
Campbell Soup (CPB, $39.43) has been a tough stock to own since the beginning of 2017. Fueled by a myriad of internal and external challenges, Campbell fell from a 2016 peak near $67 to a low near $32 early this year.
Third Point’s Daniel Loeb sees an opportunity, however. That’s why he has steered more than 10% of Third Point’s value into the iconic food company. His 21 million shares currently are worth nearly $830 million and represent a 7% stake in the company itself, which gives Loeb enough leverage to exercise has brand of activism.
Investors certainly could do worse than follow Loeb’s lead. He’s got a penchant for dealmaking within the food industry. Third Point was a key driver of change with Mondelez (MDLZ), PepsiCo (PEP) and Heinz, just to name a few. Currently, Loeb is looking to shake things up with Nestle (NSRGY).
Market value: $19.6 billion
Billionaire investor: Bill Ackman (Pershing Square Capital)
Percent of holdings: 14.1%
Chipotle Mexican Grill (CMG, $706.48) is a major name in the fast-casual restaurant arena, and it’s a well-loved name with a loyal fan base … or it was, anyway.
In 2015, Chipotle was dogged by several foodborne illness outbreaks, including two E. coli outbreaks that sickened 60 people. Customers were slow to forget and forgive, and so were investors, who slashed CMG shares by about two-thirds between their 2015 high and 2018 low.
Billionaire Bill Ackman ultimately saw that pullback as a buying opportunity, believing the brand name was still solid enough to rebuild the company. In the second quarter of 2016, when the debacle was in full swing, Ackman’s Pershing Square ($6 billion in AUM) bought nearly 10% of Chipotle’s beaten-down stock in anticipation of a recovery for the Tex-Mex eatery.
Ackman has since scaled back on what’s turned out to be a very profitable position. But even as of the most recent look, Pershing’s 1.9 million shares still make up more than 14% of the fund’s portfolio.
Market value: $162.2 billion
Billionaire investor: Valueact Holdings
Percent of holdings: 20.4%
Citigroup (C, $69.31), like most big bank stocks, is an easy and safe company for any money manager to own. You’ll probably mirror the broad market’s performance, and you might exceed it. Either way, you’ll collect a decent dividend along the way.
When you own Citigroup the way ValueAct Holdings ($8 billion in AUM) owns it, though, you might experience considerably more volatility than most portfolios suffer. More than 20% of the fund’s value is committed to Citigroup shares. That’s a 31.5-million share wager – one that grew by 5.3 million shares during the final quarter of 2018.
ValueAct, by the way, is no stranger to concentrated positions. Its five top stocks each make up 10% or more of the fund’s total value, with Citigroup being its biggest.
Market value: $4.3 billion
Billionaire investor: Carl Icahn
Percent of holdings: 10.5%
Technically speaking, Carl Icahn’s biggest position is in his own publicly traded Icahn Enterprises LP (IEP). Outside of the advantages of owning a piece of his own master limited partnership, though, Icahn’s biggest position is a little-known energy play called CVR Energy (CVI, $43.24). Icahn, worth $18.5 billion himself, owns nearly $3.1 billion worth of the organization’s stock. As of its last filing, the position accounted for more than 10% of the fund’s total holdings and represented a nearly 71% stake in the company.
CVR Energy, for the unfamiliar, is primarily in the oil refining and fertilizer businesses. Unsurprisingly, it brings a lot of drama to the table. Acquired by Icahn via a hostile takeover executed in 2012, the company’s most recent notoriety stems from the company’s waiver that allows it to sidestep the costs linked to the United States’ Renewable Fuel Standard Program. The waiver saves CVR millions of dollars that some argue the company can afford to pay, prompting criticism of Icahn’s conversations with EPA chief Scott Pruitt that took place after he was being considered for the job.
Fair criticisms or not, it’s clearly an edge for shareholders.
Market value: $69.9 billion
Billionaire investor: Lawrence Robbins (Glenview Capital Management)
A little more than a year ago, the healthcare industry began a wave of vertical and horizontal integrations. Insurer Humana (HUM) bought Kindred Healthcare. Cigna (CI) acquired pharmacy benefits manager Express Scripts. Amazon.com acquired online pharmacy PillPack.
And CVS Health (CVS, $53.90) bought insurer Aetna.
That last deal piqued the curiosity of Glenview Capital Management’s billionaire CEO Larry Robbins, who believes the pairing will foster synergies. “It is an attractive deal for both sides,” he said in December 2017 when the offer was first made. He added, “Investors today are making a mistake by undervaluing CVS, much the way they undervalued Aetna in 2013.”
He had already put his money where his mouth is. As of the third quarter of 2017, Glenview Capital ($10.3 billion in AUM) owned 3.8 million shares of CVS. As of the end of last year, the fund owned almost 8.5 million shares, accounting for more than 5% of the fund’s portfolio.
Courtesy M.O. Stevens, CC BY-SA 3.0
Market value: $3.5 billion
Billionaire investor: SouthernSun Asset Management
Percent of holdings: 5.1%
With only $1.4 billion in assets, Memphis-based management firm SouthernSun Asset Management is a relatively small fish in a rather big ocean. But founder and CEO Michael Cook isn’t afraid of making big bets. Not only does SouthernSun also own a sizable stake in Brink’s, but one of its top stocks at more than 5% of its portfolio consists of an off-the-radar hotel chain called Extended Stay America (STAY, $18.35).
At first blush, Extended Stay America looks like a conventional hotel. It’s not. As the name implies, it’s set up to accommodate guests that need to stay somewhere for more than just a few days. Its rooms include kitchenettes that let guests live in their rooms as a home away from home.
Revenue growth has stalled since 2016. But considering the company’s nearly 4.9%, SouthernSun’s Cook might not be overly concerned.
Market value: $510.8 billion
Billionaire investor: Mark Zuckerberg (Facebook CEO)
It’s not difficult to become the biggest shareholder of a company you started. But, by large-company and modern-day standards, Mark Zuckerberg’s 410.5 million shares make him by far the single biggest shareholder of Facebook (FB, $178.87). For perspective, there are a total of 2.4 billion outstanding shares of FB. The next-largest investor is mutual fund group Vanguard, but with only 176 million shares.
His $53.8 billion stake in the company comes with a couple of footnotes. Namely, Zuckerberg – who is worth nearly $67 billion – has earmarked the vast majority of his shares to be given to charity. He hasn’t been specific with timeframes about that philanthropic giving, however, so Zuck could keep a commanding control of the company for a long, long time.
* While Mark Zuckerberg is legally required to disclose his stake in Facebook by virtue of being a major “insider” shareholder, unlike hedge funds, Zuckerberg is not required to disclose his other holdings or total value of his portfolio.
Market value: $25.3 billion
Billionaire investor: Chase Coleman, III (Tiger Global Management)
Percent of holdings: 7.8%
Tiger Global Management ($15 billion in AUM) already was a major shareholder of carmaker Fiat Chrysler (FCAU, $16.44). But with billionaire Chase Coleman’s decision to add another 18.9 million shares of FCAU in the final quarter of last year, Tiger Global is now the company’s second-biggest investor at 81 million shares, which was the fund’s fourth largest holding at 7.8% of the portfolio value, as of the company’s most recent 13F.
It’s a curious choice. Fiat Chrysler, like most other automobile manufacturers, isn’t faring too well in the shadow of “peak auto” and in the midst of a tariff war that may or may not be creating a global economic headwind. Shares have lost almost a third of their value in a year.
But perhaps there is a savvy strategy behind the decision after all. The company may be a buyout target (Renault is the subject of recent rumors), or if nothing else, primed for a partnership that finally bears some much-needed fruit. Either could turn into a nice payday for Tiger Global’s investors.
Market value: $55.9 billion
Billionaire investor: David Einhorn (Greenlight Capital)
Percent of holdings: 28.9%
The bullish thesis on automaker General Motors (GM, $39.66) back in 2017 was solid enough. Although 2015’s “peak auto” fear became a reality a couple of years later, GM shares were dirt-cheap, trading at a rock-bottom trailing-12-month price-to-earnings ratio of less than 6.
That was cheap enough for Greenlight Capital’s billionaire founder and president David Einhorn, who stepped up his stake in the seemingly undervalued stock in 2017. At the time, Einhorn was agitating for some financial engineering that would unlock value with the car company, but even that was rooted in old-fashioned confidence in the organization. Later in 2017, he plainly explained, “GM is not going to be put out of business” even if the stock was priced for a pending collapse.
Greenlight Capital’s chief has since dialed back on his total exposure to General Motors, in step with the decline of the stock’s price. But the 11.9 million shares the fund holds still represented 29% of the fund’s total value as of the company’s latest filing – and they’re still arguably undervalued.
Market value: $7.3 billion
Percent of holdings: 8.9%
Had it not been for a five-year fight between activist investors Carl Icahn and Bill Ackman, health supplement company Herbalife (HLF, $51.11) may have remained off the radar. But when two of the most outspoken fund managers took opposing positions in HLF – Icahn owned, Ackman shorted – fireworks were inevitable.
Icahn won that war.
In late 2017, unable to continue holding on to a short position that was losing ground in a hurry due to the stock’s gains, Ackman announced he was closing out Pershing Square’s short trade in HLF and discontinued trying to talk the stock lower.
The standoff wasn’t just about ego for Icahn. He was and still is a believer of the company. As of the end of 2018, he still owned more than 35 million shares of Herbalife, making it one of the top stocks in the billionaire investor’s portfolio at almost 9%.
Market value: $255.1 billion
Billionaire investor: Cavalry Management Group
Percent of holdings: 8.0%
Intel (INTC, $56.71) has a large institutional following and fan base, ranging from hedge funds to analysts to proprietary traders. That’s one of the upshots of being at the heart of the computer revolution, and being around in a big way for more than a couple of decades.
Even while it’s being lapped by rival Advanced Micro Devices (AMD) in several areas, nostalgic stock pickers are willing to give Intel the benefit of the doubt.
Cavalry Management Group is one of those fans.
Founder and chief John Kennedy Hurley was willing to step into a big Intel position during the fourth quarter of last year, when INTC shares weren’t performing well, scooping up a total of about 733,300 shares now worth $41.5 billion. Cavalry is a small fund at $429.3 million in AUM, but it’s worth noting because of its heavy tech bent – its portfolio’s nine largest holdings are tech companies, including other chip stocks such as Qualcomm (QCOM) and Texas Instruments (TXN).
Market value: $26.8 billion
Billionaire investor: Brahman Capital
Percent of holdings: 12.6%
IQVIA Holdings (IQV, $136.29) is anything but a household name. But a couple of money managers have scoured the market to make the company a big piece of their portfolios.
IQVIA Holdings, formerly known as Quintiles and IMS Health, operates at the intersection of healthcare and technology. The company specifically helps life science, drug-development and even care-provider companies collect and analyze all sorts of data, then use that data to bring new products to the market.
Brahman Capital ($1.7 billion in AUM) sees enough opportunity in the nascent industry to make IQVIA a sizeable part of its fund. IQV shares commanded 12.6% of Brahman’s portfolio as of its last filing, making it the firm’s third-largest position. At current prices, that stake is worth $256 million.
Market value: $360.8 billion
Billionaire investor: Greenhaven Associates
Percent of holdings: 9.5%
JPMorgan Chase (JPM, $111.10) is America’s biggest bank by assets. Thus, ownership is common in and outside of the index-fund world. Many discretionary stock pickers can safely step into the diversified bank stock and be reasonably assured at least a market-matching performance.
Interestingly, a closer look at most holdings reveals that the average fund’s stake in JPM isn’t overwhelmingly big. But that’s not the case for Edgar Wacheheim’s Greenhaven Associates ($5.2 billion in AUM). Nearly 10% of the fund’s portfolio is allocated to JPM shares – a total of more than 5 million.
If the name Edgar Wacheheim rings a bell, it may be because he’s the author of Common Stocks and Common Sense. The well-received book largely describes the value-minded fund chief’s stock picking philosophy.
Courtesy Mike Kalasnik via Wikimedia Commons
Market value: $17.3 billion
Billionaire investor: Ashe Capital Management
Percent of holdings: 13.8%
The capital structure of Liberty Broadband (LBRDK, $95.45) is a bit complex. There are three different stocks, though each are investments in the same company:
The odd class structure of Liberty Broadband – which primarily represents assets in Charter Communications (CHTR), which operates under the Spectrum brand – is largely the result of the spinoff of several media properties.
While they lack the voting power of class-B shares, Ashe Capital Management ($1.2 billion in AUM) co-founder and CEO William Crowley doesn’t seem to mind the less-potent lower tiers of shares. The hedge fund owns almost 1.4 million of the broadband service’s non-voting stock and another 1 million shares of Class A shares, which combine to make up nearly 14% of the fund’s total portfolio.
Ashe even holds a couple more spinoff entities that were the result of unconventional dealmaking, include Liberty Sirius XM (LSXMK) and Liberty Latin America (LILAK).
Market value: $246.3 billion
Billionaire investor: Gardner Russo & Gardner
Percent of holdings: 12.7%
Credit card middleman Mastercard (MA, $240.09) is a favorite among hedge funds. A total of 185 funds that file SEC form 13F hold a stake in Mastercard, and 39 of those funds have made MA one of their 10 top stocks.
The affinity makes sense. Mastercard still is growing, in part by tiptoeing into payment options that consumers are increasingly embracing – such as cryptocurrency and connected cars – to remain relevant.
Few professional stock pickers, however, have embraced what Mastercard is and is becoming as much as money management firm Gardner Russo & Gardner ($12 billion in AUM). Even after Tom Russo sold off 273,000 shares of MA during the fourth quarter of last year, the firm still holds more than 8 million shares of Mastercard, which makes up 12.7% of its total portfolio.
Market value: $47.3 billion
Billionaire investor: David Tepper (Appaloosa Management)
Percent of holdings: 25.1%
Shares of memory-chip maker Micron (MU, $42.76) were hammered in 2018, and understandably so. A glut of memory chips up-ended their pricing power, crimping margins and putting the entire industry on the defensive. But investors had seen this before, and an end to the downcycle took shape when matters appeared to be at their worst.
Appaloosa Management ($5 billion in AUM) founder and president David Tepper – who also owns the NFL’s Carolina Panthers and is worth $11.6 billion – hasn’t been deterred, sticking with what has become a big-time bet on a turnaround, remembering the market usually doesn’t see the rebound taking shape until it’s well underway.
His fund’s 16 million shares of MU made up a stunning 25% of Appaloosa’s total holdings as of its most recent 13F – and that was after he sold 20 million shares during the final quarter of 2018. His stake currently is worth about $685 million.
Market value: $926.6 billion
Billionaire investor: Chris Hohn (TCI Fund Management)
Percent of holdings: 11.1%
Microsoft (MSFT, $120.77) isn’t difficult to defend as a portfolio holding. Its Windows operating system is still the most popular in the world, and the company has fully figured out how to drive recurring revenue by selling cloud-based services.
The market has rewarded that success. Since 2015’s lull, MSFT shares have roughly tripled, with the stock reaching record highs – again – in April.
Billionaire Chris Hohn, who heads up TCI Fund Management (almost $20 billion in AUM), doesn’t appear to be intimidated. The firm picked up another 8.6 million shares during the fourth quarter of last year to bring the total count to roughly 21.8 million, making up a little more than 11% of his fund’s value at the time. Right now, the position is worth about $2.6 billion.
Market value: $72.5 billion
Billionaire investor: Nelson Peltz (Trian Fund Management)
Percent of holdings: 8.1%
Unlike most of its food peers, Mondelez International (MDLZ, $50.12) has held its ground since early 2016 and has been a star performer this year so far. As of the most recent look, MDLZ stock was up more than 25% in 2019.
It’s a gain that Trian Fund Management ($9.3 billion in AUM) has been waiting a long time to see take shape.
Billionaire CEO Nelson Peltz first took on a stake in 2012, aiming to orchestrate a deal with beverage and snack giant PepsiCo (PEP). That deal never panned out, but Peltz never gave up his position. As of the end of the fourth quarter of last year, Trian still held nearly 19 million shares of Mondelez, making it one of the fund’s five top stocks.
Market value: $14.0 billion
Percent of holdings: 6.7%
John Paulson actually sold a half-million shares of drugmaker Mylan (MYL, $27.07) during the fourth quarter of last year. But even with that partial exit, Paulson & Co. still owns a little more than 11 million shares, good for 6.7% of the portfolio as of its last filing.
Mylan, of course, is the company that found itself in a spotlight it didn’t want to be in a couple of years ago. A congressional hearing regarding pricing policies that had allowed its EpiPen to rise more than 500% in just a few years forced the company’s top executive, Heather Bresch, to publicly acknowledge she was aware of the policies.
Paulson was a committed investor before the EpiPen flare-up forced Mylan to rethink its pricing, and he remains so today – though with a slightly smaller holding than before.
Market value: $11.7 billion
Billionaire investor: Knighthead Capital Management
Percent of holdings: 48.8%
PG&E (PCG, $22.26) is a well-known utility stock, but not for the right reasons. The company also known as Pacific Gas & Electric was driven to bankruptcy because of its role in causing or exacerbating some of last year’s California’s wildfires.
Naturally, that crushed the stock. Even before the official bankruptcy filing was made, PG&E shares were in a freefall. But the late-January bankruptcy petition also turned into a capitulation for the stock. PCG has more than tripled since its mid-January low as the market starts to realize the worst-case scenario likely already was priced in.
Relatively small Knighthead Capital Management ($300 million in AUM) is an exception on this list because it made one of the most notable moves among hedge funds in the past 12 months.
That is, Knighthead may have seen PCG’s rebound coming, because it bet big on that outcome. As of the end of last year, the fund owned 12.6 million shares of the beaten-down utility stock that accounted for nearly 50% of its total assets at the time. The previous quarter, its 1.25 million-share position in PG&E represented a mere 2.7%.