5 Unexpected Stocks Billionaires Were Piling Into in Q3

When the term billionaire gets thrown around, many think ‘Bill Gates’ or ‘Mark Zuckerberg’. Due to the trend of tech billionaires becoming more prominent, we generally expect billionaire investors buying tech stocks, not the stocks of everyday, ‘boring’ companies. Yet according to the latest 13F data, many billionaire investors have recently invested in exactly those types of boring companies, and arguably, many of them made large chunks of their fortunes off such companies.

In this article we’ll take a look at five such stocks that billionaire hedge fund managers were piling into in Q3, which are Home Depot Inc (NYSE:HD), Bank of America Corp (NYSE:BAC), EOG Resources Inc (NYSE:EOG), Johnson Controls International plc Ordinary Share (NYSE:JCI), and D.R. Horton, Inc. (NYSE:DHI). The following rankings are based on the change in the number of billionaire owners of each stock during the third quarter.

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 D.R. Horton, Inc. (NYSE:DHI)
– Number of Billionaire Shareholders (as of September 30): 9
– Total Value of Billionaire Holdings (as of September 30): $565.17 million

According to our database of 64 billionaires, 9 were long D.R. Horton, Inc. (NYSE:DHI) at the end of September, up from 4 at the end of June. Even more impressively, the value of shares that the billionaires were long increased to $565.17 million by the end of Q3 from $353.42 million at the end of Q2. Although the stock is down by 10% year-to-date and U.S. interest rates could rise given the Trump win, D.R. Horton trades for just 9.67-times forward earnings estimates. Shares also yield 1.4%. If the U.S. economy remains robust, D.R. Horton could prove cheap in the long run.

#4 Johnson Controls International plc Ordinary Share (NYSE:JCI)

– Number of Billionaire Shareholders (as of September 30): 11
– Total Value of Billionaire Holdings (as of September 30): $996.91 million

Like D.R. Horton, a net total of five billionaires added Johnson Controls International plc Ordinary Share (NYSE:JCI) to their equity portfolios in the third quarter. Andrew Kaplowitz of Citi recently initiated a ‘Buy’ rating on the stock. The analyst has a $54 price target on it, citing “above-average visibility to outsized earnings growth.” Shares of Johnson Controls International have been hot, rising by 44% year-to-date. Shares currently trade for 14.5-times forward earnings estimates.

On the next page we’ll check out three more stocks that billionaire hedgies were piling into last quarter.

#3 EOG Resources Inc (NYSE:EOG)

– Number of Billionaire Shareholders (as of September 30): 8
– Total Value of Billionaire Holdings (as of September 30): $281.93 million

Although crude prices are around half of what they were in 2014, EOG Resources has a bright future. Not only does it have a solid balance sheet and a low cost of production, but it also has acreage in some of the most competitive shale plays in the world. If OPEC can agree on the specifics of a production cut, EOG could have more upside ahead. 8 billionaire investors reported holding stakes in EOG Resources Inc (NYSE:EOG) as of the end of Q3, up from just 2 at the end of June. Among the new billionaire shareholders is Daniel S. Och‘s Oz Management, which opened a 1.54 million-share long position, in addition to also starting a call options position underlying 1.88 million EOG shares.

#2 Bank of America Corp (NYSE:BAC)

– Number of Billionaire Shareholders (as of September 30): 15
– Total Value of Billionaire Holdings (as of September 30): $1.86 billion

Shares of Bank of America have been on a tear since Donald Trump’s victory on November 8. Due to Trump’s proposed policies of cutting taxes, increasing infrastructure spending, and preserving entitlements, the market is expecting more inflation ahead, which will likely prompt the Federal Reserve to finally begin normalizing interest rates. No mega-bank arguably benefits more from higher interest rates than Bank of America. Given Bank of America’s 0.85 price-to-book ratio, bulls hope there is more long-term upside ahead. 15 billionaires in our system reported owning Bank of America Corp (NYSE:BAC) as of September 30, up from 9 at the end of June.

#1 Home Depot Inc (NYSE:HD)

– Number of Billionaire Shareholders (as of September 30): 17
– Total Value of Billionaire Holdings (as of September 30): $2.68 billion

With 17 billionaires reporting a collective stake of $2.68 billion in the stock as of the end of September, up from 11 billionaires with $2.69 billion in HD holdings at the end of June, Home Depot Inc (NYSE:HD) is billionaire investors’ hottest stock on our list. While shares fell on a slightly soft Q3 earnings report, Home Depot remains on track to achieve $100 billion in sales by 2018. Analyst Michael Lasser of UBS thinks Home Depot’s quarterly comps show that it can sustain its earnings growth momentum, and has a $145 price target on the stock.

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