It's a strange time to be investing. Inflation is a big concern, interest rates are still high, and there's worry that we won't see a smooth economic landing and might even hit a recession. On top of that, the S&P 500 has shot up by almost 25% in the past year and is hovering near record highs.
While it doesn't mean we should follow their every move, given the complicated investing landscape we find ourselves in, it can be useful to peek at what the super-rich are up to with their portfolios. Here's a look at what some top billionaires are selling and buying right now.
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A wave of selling unfolds
If you take a quick look around the internet, you'll notice quite a bit of selling going on, and surprisingly, a large chunk of it is CEOs offloading shares of their own companies.
Among the leaders is Jeff Bezos, the former CEO and founder of Amazon. In February, he cashed out 50 million shares, totaling a whopping $8 billion. It marked the first time he'd sold shares since 2023.
Then there's Mark Zuckerberg, CEO of Meta Platforms. Toward the end of 2023, he parted ways with 1.8 million shares, pocketing nearly $500 million. It was his first round of selling in over two years.
Next up is Jamie Dimon, CEO of banking giant JPMorgan Chase. In late February, he sold around $150 million of stock. Although not a relatively huge amount, it was surprising as it was his first time selling shares during his tenure as CEO.
The Walton family, owners of Walmart, also joined the selling spree. Over a two-week period in February, the Walton Family Holding Trust raked in $1.5 billion after selling 8.8 million shares.
And let's not forget Warren Buffett, CEO of Berkshire Hathaway and legendary investor. He and his company made headlines by offloading 115 million Apple(NASDAQ: AAPL) shares, totaling around $40 billion. While not the CEO of Apple, Buffett's substantial stake in the company made this move quite unexpected.
Collectively, these businesses are among the most prominent and high-profile in the world. So, when their CEOs start selling shares, it naturally raises questions. While some sales are part of scheduled divestments, external factors may offer a more comprehensive explanation for this trend.
In essence, the stock market saw notable gains at the beginning of 2024. That in itself might be enough to realize some gains. But when coupled with an election year in the U.S., escalating tensions in the Middle East, and the prospect of prolonged higher interest rates, CEOs may view this as a time to seek safer investment avenues.
What are they buying?
While selling at this level is not unprecedented, the seemingly condensed timeline over just a few months is noteworthy. Additionally, it prompts the question: What investments are these CEOs turning to in light of their divestitures?
If the primary goal behind these sell-offs is to seek refuge from global uncertainties, it logically follows that funds would be redirected to sectors known for their resilience during economic instability and shifting political climates.
We can see evidence of this with Buffett's recent activity. While selling Apple, he doubled down on oil giant Chevron (NYSE: CVX). Surely, its 4.4% dividend is attractive, but the buying comes amid a broader reallocation of Berkshire Hathaway's portfolio to gain more exposure to energy and oil, two sectors known to do quite well amid an uncertain economic outlook.
In a similar vein, famed hedge fund manager Ray Dalio seems to be following the Oracle of Omaha's strategy to find defensive positions. In the last quarter, Dalio's Bridgewater Associates upped its stake in Altria Group (NYSE: MO), one of the world's major tobacco companies. While tobacco doesn't generally shine in bull markets, when things take a turn for the worst, tobacco generally weathers the storm fairly well as consumers continue to buy its products regardless of economic conditions. What's more, Altria currently offers a generous 9% dividend.
These moves highlight a growing trend of hedge funds seeking safe harbors. Data from Goldman Sachs shows that the rate of buying by hedge funds in historically defensive sectors, such as healthcare, utilities, and consumer staples, was at its highest in over eight months.
Known for their steadiness and resilience in volatile conditions, defensive sectors may see more buying from billionaires and hedge funds in the coming months as the geopolitical landscape shifts and a higher interest rate environment limits growth opportunities.
What it means for you
Keeping track of the investment activity of billionaires and hedge funds can provide valuable insights, but it doesn't mean copying their moves will lead to success for regular investors like you and me. They have vast resources at their disposal -- and often different goals than the average individual investor -- that might influence their stock moves.
So, what can we learn from their recent actions? Well, it seems there might be some bumpy roads ahead in the market. But that doesn't mean we should stop investing. Studies have shown that what matters more than trying to time the market is simply sticking with it over time. Stay consistent about investing in companies you believe in for the long haul, and your future self will be thanking you.
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John Mackey, former CEO of Whole Foods Market, an Amazon subsidiary, is a member of The Motley Fool’s board of directors. JPMorgan Chase is an advertising partner of The Ascent, a Motley Fool company. Randi Zuckerberg, a former director of market development and spokeswoman for Facebook and sister to Meta Platforms CEO Mark Zuckerberg, is a member of The Motley Fool's board of directors. RJ Fulton has no position in any of the stocks mentioned. The Motley Fool has positions in and recommends Amazon, Apple, Berkshire Hathaway, Chevron, Goldman Sachs Group, JPMorgan Chase, Meta Platforms, and Walmart. The Motley Fool has a disclosure policy.
