Every quarter, I sift through a list of thirty billionaire asset managers and their holdings, uncovering the biggest similarities and differences that might be ripe for in-depth study.
All the favorites are on my list: Warren Buffett, George Soros and Carl Icahn are some of the more notable names. Big earners like David Einhorn, Stanley Druckenmiller and Donald Yacktman add extra weight to the group, joining twenty-four others who have amassed a ten-figure (or higher) bank balance through market speculating.
One of my favorite studies is to see which stocks appear most often in the portfolios of these gurus. They must have a broad following from billionaires for a reason, so let's make it a point to find out why. See below for a list of six stocks that at least half of the thirty managers I follow own.
Stock
Symbol
No. of Funds That Own (out of 30)
Apple, Inc.
AAPL
18
Anadarko Petroleum Corp.
APC
18
Facebook, Inc.
FB
17
Liberty Global PLC
LBTYK
16
Micron Technology, Inc.
MU
15
Actavis PLC
ACT
15
You'd be hard-pressed to visit any stock research website and not see tons of commentary about Facebook and Apple. In the interest of uncovering lesser-known buying opportunities, let's focus on the other four stocks from this screen.
Anadarko Petroleum Corp. (NYSE: APC) Apple stock only saw a single match in its popularity, Anadarko Petroleum. Natural resource plays have been hot lately, with increased activity in the Permian Basin, Eagle Ford and in Africa. Anadarko has a balanced portfolio of assets in these areas and throughout the world, both on and offshore.
The billionaires' club attraction to APC stems from the company's recently settled pollution charges attached to its subsidiary, Tronox. In April of this year, APC was sentenced to pay $5 billion to plaintiffs, previously thought to be closer to $14 billion. With that uncertainty lifted, analysts rushed to upgrade the stock, and investors came in droves. Today's prices around the $102 mark don't woo me enough to jump on the bandwagon now, however. A retreat to a previous resistance level at $98 would make this a sweet buy, especially since the average analyst price target now sits at $125.
Liberty Global Plc (Nasdaq: LBTYK) LBTYK was another favorite amongst billionaires, with investors ranging from Citadel to Berkshire Hathaway. Liberty Global is the world's largest international cable company, serving over 24 million customers. But is that what makes it such an attractive purchase for hedge fund managers?
Partly so, as Liberty Global has been on a strong acquisition spree lately, consolidating a number of digital providers in Europe to boost its bottom line. Most recently, the company penned a deal with Comcast to let each other's customers piggyback off their respective networks. With strong growth plans and a management team focused on increasing shareholder value, Liberty Global could be a killer long-term play. The stock has stalled out in 2014, however. A break through $45 again could see much higher levels from then on out.
Micron Technology, Inc. (Nasdaq: MU) Micron is a best-of-breed supplier of memory chips in the tech industry. Their consumer brands are well-known under the "Crucial" and "Lexar" monikers. MU has made waves among investors due to its super-charged gains this year so far, up 44% on a spike in prices and demand for its DRAM memory offerings.
David Einhorn of Greenlight Capital is an outspoken investor, focusing $1.3 billion of his fund's assets into MU. His contention is that the spike in prices is not short-lived, so continue to see even more value pumping out of MU. I always remain tepid of stocks that have doubled in a year's time, but impressive free cash flow and a surprisingly low forward price-to-earnings ratio of 8.8 mean there's quite a bit of unlocked value not currently priced into MU.
Actavis Plc (NYSE: ACT) The pharmaceutical manufacturer saw buying support last quarter from whales like Leon Cooperman and Stephen Mandel -- the latter owns over half a billion dollars' worth of ACT stock. Similar to Micron Technology, Actavis has posted incredible gains this year so far, up 42%.
Late last month, Goldman Sachs released a list of the most popular stocks among the 775 funds it followed, and ACT claimed the top spot (note that all the other stocks in my screen made it as well). This is likely due to its July acquisition of Forest Labs and its impressive portfolio of both branded and generic drugs, but another element is in the works here too.
After a botched bid to buy AstraZeneca earlier this year, pharm giant Pfizer has been rumored to have turned its attention toward Actavis. I'd normally advise to buy on a dip if you'd like to catch some of this momentum, but it's hard to tell if ACT will be retreating from its current levels anytime soon.
Risks to consider: Just because a stock appears in a broad number of portfolios does not make it a guaranteed buy. There is significant time lag when investing based off of 13Fs, so only focus on which stocks have long-term growth potential in this case.
Action to take --> It's easy to see the appeal of these stocks when given the context that the elite investing community has billions invested in them. All possess strong cases for future gains in stock price, with Micron and Liberty Global taking the lead, while keeping speculation and rumors low.
