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3 Stocks Billionaires Are Buying

3 Stocks Billionaires Are Buying

There is an old saying that success breeds success. When it comes to investing, many people think this saying means it can make sense to pay attention to what other successful investors are buying, and then follow their lead in the same investments. Even if you don’t get it whole With the same returns as those other people, you might be able to ride on their coattails to make a decent profit.

Fortunately for people who want to follow in the footsteps of billionaires, many of the world’s largest investors must disclose what they’re buying and selling every quarter. To see what these potentially market-moving money managers are buying, three Motley Fool contributors looked for signs of what trades these big investors have reported. They discovered that billionaire investors have been buying Nvidia (NASDAQ: NVDA), Starbucks (NASDAQ:SBUX)And Chevron (NYSE: CVX). Read on to find out why, and decide for yourself whether following these investors’ leads can help you build your own wealth.

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This Magnificent Seven stock is hot, hot, hot these days

Eric Volkman (Nvidia): Billionaire Ray Dalio’s monster hedge fund Bridgewater Associates is clearly preoccupied with the future of artificial intelligence (AI). That’s the strong signal sent by Bridgewater’s more than fivefold increase in his position recently in one of the Magnificent Seven stocks more easily associated with AI, Nvidia.

Nvidia’s stock in trade consists of graphics processing units (GPUs), many of which are used to power AI capabilities in data centers. The rush to develop these functionalities has greatly increased the demand for all kinds of hardware needed to support these functionalities, and Nvidia GPUs are at the center of this.

It’s no wonder the company’s latest quarterly results were so impressive. Do you think doubling sales year-on-year is an achievement? Well, that’s nothing compared to Nvidia’s 265% revenue improvement in the fourth quarter, not to mention the nearly 500% increase in non-GAAP (adjusted) net income.

AI is a very long-lived technology, and because it can be applied to a wide range of processes and systems, it has the potential to generate many revenue streams. If Nvidia’s products remain central to this – a likely scenario – we can expect the company to see even more blowout quarters in the future.

The only serious caveat with Nvidia is that it’s on many investors’ radar screens these days; it seems that almost every individual and institution in the market wants the stock in their portfolio. Even with these extraordinary recent fundamentals, the company is very pricey in terms of its valuations, which could make the explosive share price growth a thing of the past.

More than a quick jolt

Jason Hall (Starbucks): While recently reviewing SEC Forms 13-F, I noticed something interesting for Starbucks: Two of the largest and most successful quantitative trading firms, DE Shaw and Renaissance Technologies, both bought shares in their most recently reported quarter. For those who don’t know, David Shaw and Jim Simons, the two founders of the former and the latter, are worth almost $40 billion between them, with their two firms being by far the two most successful quantitative trading funds.

Both Shaw and Renaissance make most of their money relatively quickly. Their business is at least partly about fast trading and leveraging data to bet big on a lot of stocks. DE Shaw, for example, opened almost 594 new stock positions last quarter, added to another 1,607, and completely sold out another 535 shares. That’s more than 2,700 shares in one quarter.

We don’t know exactly when Shaw or Renaissance bought, held or sold some of his Starbucks stock. But we do know that they both still owned something at the end of the quarter. And with the global coffee giant’s shares down more than 6% since the start of the fourth quarter of 2023, and 20% below all-time highs, there are likely near-term opportunities for gains for these companies.

But that is their game. We cannot win there for individual investors.

However, Starbucks seems very attractive for the long term. Business in China has recovered, with a 10% increase in store numbers and strong 5% same-store growth in the US. Management also expects earnings per share growth of 15% to 20% this year. Combine that growth with a reasonable price of less than 23 times earnings and a dividend yield of more than 2.5%, and long-term investors can benefit by owning Starbucks as well.

Buffett thinks oil still has a future

Chuck Saletta (Chevron): Warren Buffetts Berkshire Hathaway recently opted to buy nearly 16 million shares of oil company Chevron, according to the most recently published filings on its quarterly investing filings. This is yet another clear signal – on top of Berkshire Hathaway’s massive investments in energy pipelines – that Buffett and his team believe there is still a future in hydrocarbon-based fuels.

They are not exactly alone in that regard. This is evident from the most recent figures from the American Energy Information Administration Annual energy forecastsNet demand for oil and natural gas is expected to remain relatively constant at least until 2050. And in a world where that demand will remain constant for decades to come, it is of course unlikely that people will simply stop using these fuels for fuel. once 2051 rolls around.

The reality is that even if you assume a limited future for carbon-based fuels, an investor can make decent returns at the right price by owning shares of companies involved. It’s a value investing strategy based on the old-fashioned practice of looking at what the company’s cash flows will look like over time.

An investor trading at about 14 times earnings doesn’t need to forecast huge growth to have a chance at decent returns from Chevron. That’s especially true when you consider that Chevron pays its investors a decent dividend yield of around 4%.

Even if we look at it simplistically, with a stable return of 4%, an investor would get his or her money back over the course of 25 years. That provides a potential path to a full return on invested capital over that time, while the investor would still own the shares that generate those dividends. And since demand is likely to continue beyond that point, there’s obviously an opportunity to earn even more.

Net – even if there isn’t a huge growth story, there are good reasons to believe there is still value to be extracted from the oil patch. And if that’s good enough for Buffett, maybe it’s good enough for us mere mortals, too.

Are you ready to follow these leading investors?

Ray Dalio’s purchase of Nvidia, DE Shaw’s and Renaissance’s ownership of Starbucks, and Buffett’s Berskhire Hathaway’s purchase of Chevron show that there are many ways to profit from the market. These leading investors seemed to take three very different approaches to determining which stocks seemed worth their money.

That should give you good reasons to believe that you too should be able to find a path to decent returns from investing. No one – not even successful billionaires – can guarantee what you’ll make in the stock market, but as their successes over time have shown, a big part of making money in the market comes from simply showing up and following a reasonable strategy. time.

So get started now and make today the day you decide to follow these great investors into the market, regardless of whether you actually buy the exact same investments they do.

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Chuck Saletta has no positions in any of the stocks mentioned. Eric Volkman has no positions in the stocks mentioned. Jason Hall has positions in Berkshire Hathaway, Nvidia and Starbucks. The Motley Fool holds positions in and recommends Berkshire Hathaway, Chevron, Nvidia and Starbucks. The Motley Fool has a disclosure policy.

3 Stocks to Buy Billionaires was originally published by The Motley Fool



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