In this piece, we will take a look at ten beaten down stocks billionaires are loading up on. If you want to skip our analysis of the current state of the American economy, then head on over to 5 Beaten Down Stocks Billionaires Are Loading Up On.
The saga of inflation and interest rate uncertainty that has plagued the stock market for more than a year now seems to be coming to an end. And with it, hopefully, the turmoil that was ushered in by the coronavirus pandemic. The pandemic's after effects are still being felt in the economy today in the form of high inflation. This inflation first started to surface as the money pumped into the economy as part of stimulus spending increased purchasing powers, and then the Russian invasion of Ukraine exacerbated the problem.
This forced the Federal Reserve, which had initially delayed raising interest rates, to rapidly hike them in an attempt to constrain economic growth. These interest rate hikes have persisted this year, albeit in a more toned down manner. They've also made their mark on the banking sector, with the failure of several large banks unable to meet customer commitments in the wake of rapidly devaluing asset bases.
However, all this saga, which has created a laser focus among analysts, economists, and business people on key macroeconomic indicators such as inflation rates and the labor market, seems to be coming to an end. June has been mostly a good month for those hoping that the Federal Reserve will not increase interest rates. At the start of the month, the Labor Department released the jobs report for May, showing that the economy had added 339,000 new jobs - surpassing estimates - but unemployment rates had also ticked up.
However, soon afterward, markets were given a breath of fresh air as the data for unemployment insurance claims rolled in. This data, which was for the week ending on June 3rd, has a lower time lag and represents one of the closest snapshots of the economy due to its temporal proximity. And voila! This data showed that claims had jumped by 28,000 during the week. Not only did this beat analyst estimates, but the claims fell just 3,000 short of the recent record set during the coronavirus pandemic.
Building on this, as June's second week comes to a close, the Labor Department was out with some more good news. Its latest data shows that as a whole, inflation in May ticked up by just 0.1% for the lowest level since March 2021. As a whole, annual inflation sits at 4%, back to the levels that it was in March 2021. However, the price drops were not unanimous or across the board. A deep dive into the labor department's data shows that energy, fuel, and utility prices 'fueled' the lower inflation reading. On the flip side, non core inflation, one which measures the prices of everything apart from food and energy, jumped by 0.6% and was aided in this trend to a large extent by the prices of used cars and trucks. Two additional key contributors to inflation, the prices of both of which accelerated in May are shelter and transportation services. Annually, the prices for these have jumped by 8% and 10.2%, respectively.
However, this positive inflation data might not mean that the Fed's interest rate hike cycle is over. At least that's what economists polled by the Financial Times believe. While the current Fed discount rate sits at 5.25%, economists believe that the Fed might raise this to as high as 6% to ensure that high inflation does not become a permanent part of the American economy. The Fed's long term inflation goal is 2% after all, and a reading of 4% in May is still double that amount.
After the latest data release, the S&P 500 jumped by 0.48% and the NASDAQ appreciated by 0.52%, while the U.S. dollar weakened. Yet, just because markets are up doesn't mean you should be complacent. That's what billionaire Ken Fisher of Fisher Investments believes, as he thinks that not only does a lack of corporate experience at the Federal Reserve and Congress create the potential for negative impacts from excessive regulations particularly in the wake of the mini banking crisis this year, but there might be conflict brewing in places nobody is talking about. One such example according to him is:
. . one that nobody talks about, that I'm watching very closely, and has not up blown up and I surely hope it does not is conflict between India and Pakistan. Two nuclear powers. Neighbors. Traditionally hostile to each other. And, where India was benefiting last year from discounted oil Russia had to be able to sell, so India got it cheaply. One of the few countries last year that did as Russia had to put out more oil than ever before because of the Western sanction that deprived it of its traditional industrial base. Now, Pakistan's getting a lot of that, taking oil away from India, building the tension between them.
Yet, as the markets have plummeted this year, this has created opportunities to get into stocks that have fallen with the market. Some such stocks that billionaires are buying are Danaher Corporation (NYSE:DHR), UnitedHealth Group Incorporated (NYSE:UNH), and Elevance Health, Inc. (NYSE:ELV).
10 Beaten Down Stocks Billionaires Are Loading Up On
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Our Methodology
To compile our list of beaten down stocks that billionaires are buying, we first narrowed our list to roughly ninety firms by taking a look at which S&P 500 stocks have lost more than 10% on the stock market year to date so far. Then these were ranked by the number of billionaire investors as of Q1 2023 and the top stock picks are listed below.
10 Beaten Down Stocks Billionaires Are Loading Up On
The Estée Lauder Companies Inc. (NYSE:EL) is personal products firm headquartered in New York, New York. It sells hair care, skin care, and other products under a variety of brands.
By the end of this year's first quarter, 56 of the 943 hedge funds part of Insider Monkey's database had held a stake in The Estée Lauder Companies Inc. (NYSE:EL). The firm's largest hedge fund investor in our database is Terry Smith's Fundsmith LLP with a $1.3 billion investment.
Along with UnitedHealth Group Incorporated (NYSE:UNH), Danaher Corporation (NYSE:DHR), and Elevance Health, Inc. (NYSE:ELV), The Estée Lauder Companies Inc. (NYSE:EL) is a beaten down stock that's still being bought by billionaires.
ConocoPhillips (NYSE:COP) is a major oil and gas company. Headquartered in Houston, the firm was set up in 1917 and it produces and sells petroleum products such as crude oil, natural gas, and liquefied natural gas (LNG).
As of March 2023, 72 of the 943 hedge funds polled by Insider Monkey had bought ConocoPhillips (NYSE:COP)'s shares. Out of these, Boykin Curry's Eagle Capital Management is the largest investor with a $786 million stake.
8. Bio-Rad Laboratories, Inc. (NYSE:BIO)
Number of Billionaire Investors In Q1 2023: 16
Bio-Rad Laboratories, Inc. (NYSE:BIO) is a healthcare company based in Hercules, California. It makes and sells chemical and diagnostic products used in laboratories and drug development centers.
Insider Monkey dug through 943 hedge funds for their Q1 2023 shareholdings and found out that 47 had invested in Bio-Rad Laboratories, Inc. (NYSE:BIO). Israel Englander's Millennium Management is its largest shareholder with a $219 million stake.
7. Fidelity National Information Services, Inc. (NYSE:FIS)
Number of Billionaire Investors In Q1 2023: 12
Fidelity National Information Services, Inc. (NYSE:FIS) is a financial products and services provider. Set up in 1968, the firm is based in Jacksonville, Florida.
68 of the 943 hedge funds surveyed by Insider Monkey for their March quarter of 2023 shareholdings had bought the firm's shares. Fidelity National Information Services, Inc. (NYSE:FIS)'s largest hedge fund investor is Ken Griffin's Citadel Investment Group with a $283 million stake.
CVS Health Corporation (NYSE:CVS) is a healthcare retailer and pharmacy chain operator. The firm is based in Woonsocket, Rhode Island.
As of Q1 2023, 77 of the 943 hedge funds profiled by Insider Monkey had bought and owned CVS Health Corporation (NYSE:CVS)'s shares. Its largest shareholder is none other than John Overdeck and David Siegel's Two Sigma Advisors who owns 1 billion shares that are worth $406 million.
Danaher Corporation (NYSE:DHR), CVS Health Corporation (NYSE:CVS), UnitedHealth Group Incorporated (NYSE:UNH), and Elevance Health, Inc. (NYSE:ELV) are some falling stocks that billionaires are buying.
