David Tepper, founder and president of Appaloosa Management and owner of the NFL's Carolina Panthers
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By Dan Burrows
last updated
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 made more money being right than they've lost when getting it 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 in the fourth quarter. If you're wondering why mega-cap tech and communication services names rallied so hard into the end of 2023, well, buying pressure on the part of billionaires is at least part of the equation. All five stocks below hail from those high-flying sectors.
Disclaimer
Stake values and portfolio weights are as of December 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.
1/5
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Oracle
- Billionaire investor: Steve Cohen (Point72)
- Stake value: $229.7 million
- Percent of portfolio: 0.56%
Steve Cohen is probably best known for using his estimated net worth of $19.8 billion to buy the New York Mets. But he's also known for spying bargains. Perhaps that's what his Stanford, Connecticut-based Point72 hedge fund saw in Oracle (ORCL).
Shares in the Silicon Valley stalwart haven't enjoyed the sort returns seen elsewhere in a sector driven by AI excitement. Maybe it's only a matter of time?
At any rate, Point72, with $31.4 billion in assets under management (AUM), initiated a position in ORCL in the fourth quarter. With 2.2 million shares worth $229.7 million as of December 30, it's a small stake, to be sure, accounting for the fund's 14th largest holding.
Although shares in Oracle only match the performance of the broader market over the past year or so, Cohen would seem to think they're due. Analysts surveyed by S&P Global Market Intelligence give ORCL stock a consensus recommendation of Buy, albeit with middling conviction.
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2/5
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Amazon.com
- Billionaire investor: Daniel Sundheim (D1 Capital Partners)
- Stake value: $186.6 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 $27.6 billion in AUM.
Along the way, Sundheim built an estimated net worth of $2.9 billion, according to Forbes. 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 Q3 initiated a sizable position in Amazon.com (AMZN), which happens to be one of Warren Buffett's favorite stocks. Indeed, Berkshire Hathaway (BRK.B), of which Buffett serves as chairman and CEO, has owned shares in the e-commerce goliath since early 2019.
Not to be outdone, Sundheim's D1 Capital boosted its AMZN stake in Q4 by 36%. The fund now holds 1.2 million shares worth $186.6 million as of December 30. AMZN is D1's 15th largest holding.
Happily for Sundheim's clients, analysts see plenty of upside ahead for AMZN stock. Wall Street gives shares a rare consensus recommendation of Strong Buy, according to S&P Global Market Intelligence.
It also doesn't hurt that Amazon was added to the Dow Jones Industrial Average in late February.
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3/5
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Adobe
- Billionaire investor: Philippe Laffont (Coatue Management)
- Stake value: $880.2 million
- Percent of portfolio: 3.7%
Philippe Laffont accumulated an estimated net worth of $6.1 billion in part by having good timing. Such skills were certainly on display when Laffont's Coatue Management hedge fund with $47.9 billion in assets under management upped its stake in Adobe (ADBE) by another 20% in the fourth quarter.
Adobe stock gained 17% in Q4 vs an 11% gain for the broader market.
Coatue, which has owned ADBE since the third quarter of 2022, held 1.5 million shares worth $880.2 million as of December 30. With a portfolio weight of 3.7%, ADBE is the New York hedge fund's 9th largest holding, up from 11th place last quarter.
If nothing else, Laffont finds himself in good company. Adobe leaped onto the list of hedge funds' favorite blue chip stocks. Analysts like its prospects over the next 12 to 18 months, giving ADBE stock a consensus recommendation of Buy.
Past performance is no guarantee of future results, but Adobe stock has certainly been a great long-term holding. Anyone who invested $1,000 in Adobe stock 20 years ago would be very pleased with their returns today.
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4/5
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Meta Platforms
- Billionaire investor: Stephen Mandel (Lone Pine Capital)
- Stake value: $1 billion
- Percent of portfolio: 8.7%
Shares in Meta Platforms (META) are back in a big way and Stephen Mandel, with an estimated net worth of $3.9 billion, has been all over it.
Mandel's Greenwich, Connecticut-based Lone Pine Capital hedge fund ($16.9 billion AUM) initiated a position in the Facebook parent in Q3 and then added to it in Q4. The most recent purchases brought Lone Pine's stake up to 2.9 million shares worth $1 billion as of the end of 2023.
At 8.7% of the portfolio, Meta is Lone Pine's largest holding. And the way META's share price has been raging, it is likely to get even bigger.
META stock gained 70% over the six months ended February, pushing it past $1 trillion in market value. Wall Street thinks it has more room to run, giving it a consensus recommendation just short of Strong Buy.
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5/5
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Microsoft
- Billionaire investor: David Tepper (Appaloosa Management)
- Stake value: $643.3 million
- Percent of portfolio: 11.0%
It should come as no surprise that yet another billionaire investor bet big on yet another mega-cap tech stock in the fourth quarter of 2023. After all, all that buying pressure had to come from somewhere.
David Tepper, owner of the NFL's Carolina Panthers, has held Microsoft (MSFT) since 2020, and he continued to add to the position as it added another half-trillion-dollars in market capitalization.
Appaloosa Management – Tepper's West Palm Beach, Florida-based hedge fund with $13.8 billion in AUM – upped its MSFT stake by 4% in Q4. With 1.7 million shares worth $639.3 million as of December 30, MSFT remains Appaloosa's second largest holding, accounting for 11% of the portfolio.
Tepper amassed an estimated net worth of $20.6 billion by knowing when to ride a hot hand, so this is encouraging news for MSFT bulls. Microsoft has certainly been an outstanding long-term holding. Anyone whoinvested $1,000 in Microsoft stock 20 years agoshould be thrilled with their returns today.
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Dan Burrows
Senior Investing Writer, Kiplinger.com
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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