5 Stocks Billionaires Were Dumping in Q3

Billionaire investors didn’t get to where they are (or get their bank accounts to boast that many 0’s) by being ordinary. Many made shrewd bets at the right times, while others consistently outperformed the market through multiple cycles. It’s undeniable that many billionaire money managers have historically been good investors, which includes knowing when to get out of both strong and weak-performing equities at the right times.

In this article, we’ll take a closer look at five stocks that they were dumping in the third quarter, which should be consired by shareholders of these equities as they debate whether to continue holding them or not. Monsanto Company (NYSE:MON), AmerisourceBergen Corp. (NYSE:ABC), Baker Hughes Incorporated (NYSE:BHI), SPDR Gold Trust (ETF) (NYSE:GLD), and Lockheed Martin Corporation (NYSE:LMT) are the five companies which were being dumped by billionaires; read about them below.

We follow over 700 hedge funds and other institutional investors and by analyzing their quarterly 13F filings, we identify stocks that they are collectively bullish on and develop investment strategies based on this data. One strategy that outperformed the market over the last year involves selecting the 100 best-performing funds and identifying the 30 mid-cap stocks that they are collectively the most bullish on. Over the past year, this strategy generated returns of 18%, topping the 8% gain registered by S&P 500 ETFs.

#5 SPDR Gold Trust (ETF) (NYSE:GLD)

– Number of Billionaire Shareholders at the End of September: 4

– Change From the Number of Billionaire Shareholders at the End of June: -4

According to our database of 64 billionaire investors, 4 billionaires held the SPDR Gold Trust (ETF) (NYSE:GLD) in their portfolios at the end of September, down by four from the end of June. Although gold is regarded as a ‘safe’ investment in times of economic uncertainty, the commodity has been anything but since Donald Trump’s win. Shares of the SPDR Gold Trust have fallen by over $7 since November 9 as gold has fallen below the key $1,200 per ounce level. With Trump’s promise to ratchet up fiscal stimulus through tax cuts, infrastructure spending, and deregulation, gold-friendly deflation suddenly looks a lot less likely. With the Fed likely to raise rates, rising Treasury yields dampen demand for the commodity. Whether the current calm in the equity market and the lack of concern over global risks will last is anyone’s guess however.

#4 Lockheed Martin Corporation (NYSE:LMT)

– Number of Billionaire Shareholders at the End of September: 3

– Change From the Number of Billionaire Shareholders at the End of June: -4

3 billionaires reported owning stakes in Lockheed Martin Corporation (NYSE:LMT) as of the end of Q3, versus 7 at the end of Q2. Those billionaires who sold out of Lockheed may be regretting the move, however. Like that of other defense stocks, shares of Lockheed have taken off since Trump’s surprise victory on November 8. Given Trump’s promise to rebuild the American military, more revenue-generating contracts could come Lockheed’s way, boosting an already rosy revenue-growth picture for the next four years. Analysts have an average price target of $275.35 per share on the stock.

We’ll check out three more stocks that billionaires were getting rid of in Q3 on the next page.

#3 Baker Hughes Incorporated (NYSE:BHI)

– Number of Billionaire Shareholders at the End of September: 5

– Change From the Number of Billionaire Shareholders at the End of June: -5

Although a net total of 5 billionaires sold out of Baker Hughes Incorporated (NYSE:BHI) in the third quarter, shares of the oil service giant have continued to rally. In spite of the fact that its previous merger with Halliburton was nixed, shares of Baker Hughes have surged by 34.68% year-to-date, aided by the recent General Electric Company (NYSE:GE) deal to merge the conglomerate’s oil and gas segment with Baker Hughes. GE’s management expects the deal to yield $100 million in revenue synergies and $600 million in cost synergies. Shares of Baker Hughes could have additional upside if OPEC irons out a meaningful and specific production cut at the end of this month.

#2 AmerisourceBergen Corp. (NYSE:ABC)

– Number of Billionaire Shareholders at the End of September: 5

– Change From the Number of Billionaire Shareholders at the End of June: -5

According to our data, 5 billionaires owned stakes in AmerisourceBergen Corp. (NYSE:ABC) on September 30, down by five from June 30. Some billionaires may have sold due to the perception that Hillary Clinton was likely to win the election. If Clinton had won, there would likely have been more regulatory scrutiny concerning drug prices, which would have been a negative for AmerisourceBergen. Seeing as Donald Trump won instead, analysts have become more optimistic on the stock. Ricky Goldwasser of Morgan Stanley has an ‘Overweight’ rating and $89 price target on it, citing increased confidence in the company’s earnings stream given the Republican victories in both the legislative and executive branches.

#1 Monsanto Company (NYSE:MON)

– Number of Billionaire Shareholders at the End of September: 10

– Change From the Number of Billionaire Shareholders at the End of June: -6

In terms of the net number of billionaire shareholders leaving the stock in Q3, Monsanto Company (NYSE:MON) takes the cake. Six billionaire fund managers, including Bruce Kovner of Caxton Associates, exited out of Monsanto from June 30 to September 30, leaving just 10 billionaires holding down the fort. Although Bayer agreed to buy Monsanto for $128 in cash per share, Monsanto trades for $26 per share less due to regulatory uncertainty. Given the overlap between the two companies, there is a significant probability that the deal won’t get the regulatory thumbs up that it needs.

Disclosure: None