Billionaire Louis Bacon’s 15 Long-Term Stock Picks

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Swati Goyal

Thu, Jan 4, 2024, 9:35 AM 12 min read

In the investment world where there are thousands of stocks to choose from, there are myriad paths that investors can choose. While some investors seek to generate optimum returns over a short period, others never shy away from buying and holding for the long haul. Value investing is one strategy that allows investors to pick stocks trading below their intrinsic value and try to squeeze returns as they rerate higher over time.

Investing for the long term has always proved to be an ideal investment strategy on the risk-reward front. For starters, it allows investors to absorb a small amount of risk, unlike investors who try to time the market or day trade over the short term. Long-term investing removes the emotions from the equation as an investor does not have to sit and try to manage a position, let alone worry about short-term swings.

Holding stocks for the long term allows investors to focus on the long-term outlook and viability of the business model instead of the short-term swings. In addition, aligning a portfolio for the long term increases the prospect of making money as one can shun and shrug off short-term swings. In most cases, the portfolio tends to grow in value, especially when aligned with high-quality companies trading below their intrinsic value.

Additionally, buying stocks for the long term allows investors to take advantage of compounding and the ability to reinvest profits for greater returns through share price appreciation, dividends, and buybacks. The peace and tranquility that comes with not worrying whether a portfolio took a dive or exploded overnight is an attribute that often attracts investors to long-term investing.

Louis Bacon is one of the most seasoned investors on Wall Street who has perfected the art of long-term investing and generated significant returns. A graduate of Middlebury College in Virginia, he is one of the most prominent money managers who strive to discover value stocks and invest for the long term to squeeze optimum returns.

His investment approach has been followed by seasoned hedge fund managers, including Warren Buffett of Berkshire Hathaway. Through value investing, the legendary investor picks stocks and waits patiently for their value to appreciate over time. The investment strategy entails determining a stock's fair value based on its ability to generate future cash flows that would be made available to shareholders through buybacks and dividends.

Billionaire Louis Bacon's 15 Long-Term Stock Picks

Once the fair value is ascertained, the focus shifts to ascertaining the margin of safety, which measures the current share price against the fair price. This makes it much easier to determine potential losses in case the investment goes south.

Having founded Moore Capital Management in 1989 with $25,000, the hedge fund generated average annualized returns of 17.6% through 2019 to outside investors. In addition to profiting from long-term value investing, Bacon’s impressive returns in the market also stem from diversifying investments across several securities and sectors.

While having a 13F portfolio of $5.36 billion on Moore Global Investments, Bacon boasts a diversified portfolio. The portfolio offers exposure to technology, services, financials, healthcare, and consumer goods stocks. Spreading investments across various sectors allows the legendary investor to take advantage of the various economic cycles throughout the year. Diversification has also allowed Bacon to shrug off turmoil in one sector with outperformance in other sectors in the race for long-term returns.

The legendary investor also pursues opportunities in the options market by using puts and call options to pursue high-risk reward opportunities. The hedge fund manager focuses on exchange-traded funds with diversified portfolios in the options market.

Our Methodology

Long term investment strategies have always proved their worth on the risk reward front on allowing investors to shrug short term swings. Therefore, after analysing 13F filling we have selected billionaire Louis Bacon's long-term stock picks that Moore Global Investments has held for an extended periods of time. The stocks are ranked chronologically based on the hedge fund’s stake in them in the third quarter of 2023. Hedge funds’ top 10 consensus stock picks outperformed the S&P 500 Index by more than 140 percentage points over the last 10 years (see the details here). That’s why we pay very close attention to this often-ignored indicator.