Billionaire Investors Are Bullish on These Five Stocks

Investing is a space where the barriers to entry are low, anyone with money to spare or access to capital can enter it, but the competition is perhaps more intense than any other industry. That’s because it’s a zero-sum game – for someone who makes money, there is someone else on the other side of the trade who loses it. Those fund managers who are able to achieve mastery in this game not only make a fortune for their investors, but also end up becoming billionaires themselves. At Insider Monkey we pay special emphasis on the moves made by funds led or founded by billionaire investors because their stock picks have historically performed better than the rest of the crowd. In this post, we will take a look at the top five stocks held by the 58 billionaire investors in our database discuss the changes in their popularity among billionaire investors during the first quarter.

Through extensive research, we determined that imitating some of the picks of hedge funds and other institutional investors can help generate market-beating returns over the long run. The key is to focus on the small-cap picks of these investors, since they are usually less followed by the broader market and are less price-efficient. Our backtests that covered the period between 1999 and 2012, showed that following the 15 most popular small-caps among hedge funds can help a retail investor beat the market by an average of 95 basis points per month (see more details here).

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#5 Apple Inc. (NASDAQ:AAPL)

– Billionaires with long positions (as of March 31): 18

– Aggregate value of billionaires’ holdings (as of March 31): $5.73 billion

Let’s start with Apple Inc. (NASDAQ:AAPL), which saw its ownership among billionaire investors covered by us inch up by one during the first quarter. Despite that rise in the number of funds with long positions, the aggregate value of billionaires’ holdings in the company fell during that period by 45.7%. Billionaires’ firms that reduced their stakes in the company significantly during the first quarter included Chase Coleman‘s Tiger Global Management LLC, which reduced its holding in the company by 47% to 5.65 million shares. After plummeting after the company’s fiscal second quarter earnings release, shares of Apple Inc. (NASDAQ:AAPL) have seen a rally in the past three weeks, but have so far failed to trade convincingly above the $100 mark. Investors are eagerly waiting for the company’s annual Worldwide Developers Conference, which is scheduled to begin on June 13th, for catalysts that can drive the stock higher in the short-term. On May 31, Nikkei Asian Review reported that the company is planning to stretch the lifecycle of iPhones to three years from current two-year period.

#4 EMC Corporation (NYSE:EMC)

– Billionaires with long positions (as of March 31): 19

– Aggregate value of billionaires’ holdings (as of March 31): $4.72 billion

With investors becoming more confident about the completion of its merger with Dell Inc., EMC Corporation (NYSE:EMC) saw a marked increase in its popularity among billionaire investors during the first quarter. During that period, the number of billionaire investors long EMC Corporation (NYSE:EMC) rose by two and the aggregate value of their holdings in it increased by almost $1.6 billion. EMC Corporation’s stock has appreciated by around 8% so far in 2016 and is currently trading close to Dell’s offer price. On May 2, Dell Inc. and EMC Corporation jointly announced that the new combined entity created post their merger will be called Dell Technologies. The companies expect the merger to get completed by October this year. Billionaire Seth Klarman‘s Baupost Group increased its stake in EMC Corporation by 78% to 51.85 million shares during the first quarter and became the largest shareholder of the company among the funds tracked by us as of the end of March.

#3 Alphabet Inc (NASDAQ:GOOGL)

– Billionaires with long positions (as of March 31): 19

– Aggregate value of billionaires’ holdings (as of March 31): $5.52 billion

Alphabet Inc (NASDAQ:GOOG)

– Billionaires with long positions (as of March 31): 19

– Aggregate value of billionaires’ holdings (as of March 31): $6.06 billion

Both class A and class C stocks of Alphabet saw their ownership among billionaire investors covered by us increasing by one fund during the first quarter. However, the aggregate value of billionaires’ class A  stock holdings and class C  stock holdings in the company increased by a different magnitude during that period. While in Alphabet Inc (NASDAQ:GOOGL) it rose by 7.46%, in Alphabet Inc (NASDAQ:GOOG) it inched up by only 3.87%. On May 24, the search giant reported that tax authorities in France have raided its office in Paris due to an ongoing tax probe against it. According to estimates by the French Finance Ministry, Alphabet owes the country $1.6 billion in back taxes. However, it won’t be easy for the French government to prosecute the company since the data seized by tax authorities in the recent raid can take months to analyze, according to French financial prosecutor, Eliane Houlette. Billionaire Ken Fisher‘s Fisher Asset Management increased its stake in Alphabet by 26% to 1.73 million shares during the first quarter.

#2 Facebook Inc (NASDAQ:FB)

– Billionaires with long positions (as of March 31): 20

– Aggregate value of billionaires’ holdings (as of March 31): $6.60 billion

Moving on, the number of billionaire investors covered by us long Facebook Inc (NASDAQ:FB) declined by one during the first quarter, but the aggregate value of the remaining 20 billionaires’ holdings in the company jumped by 83.5% during the same time. Shares of the social media giant have continued their rally this year, rising almost 12% so far. However, they are currently facing stiff resistance near the $120 mark. Facebook Inc (NASDAQ:FB) recently started showing ads to non-users on third-party websites and apps, which most analysts see as a step towards challenging Alphabet Inc’s dominance in the Internet advertising space. On May 31, analysts at SunTrust reiterated their ‘Buy’ rating and $135 price target on the stock. Having initiated its stake in the first quarter itself by purchasing 20.13 million shares of the company, Billionaire Andreas Halvorsen‘s Viking Global was the largest shareholder of Facebook Inc among funds tracked by us at the end of that period.

#1 Allergan plc Ordinary Shares (NYSE:AGN)

– Billionaires with long positions (as of March 31) : 28

– Aggregate value of billionaires’ holdings (as of March 31): $9.11 billion

Finally, despite its ownership among billionaire investors covered by us declining by one and the aggregate value of their holdings slumping by $424 million during the first quarter, Allergan plc Ordinary Shares (NYSE:AGN) continued to remain the favorite stock of billionaire investors at the end of March. Though Allergan plc Ordinary Shares (NYSE:AGN)’s stock already lost over 14% of its value in the first quarter, it has declined even further since the company along with Pfizer called off their merger in April. So far, Allergan plc has lost 23% of its market capitalization this year. On May 10, the company reported its fiscal 2016 first quarter earnings, declaring EPS of $3.04 on revenue of $3.80 billion versus analysts’ expectation of EPS of $3.03 on revenue of $3.97 billion. Billionaire Dan Loeb‘s Third Point was among the funds that reduced their stakes in Allergan plc heading into the second quarter, by 8% to 5 million shares.

Disclosure: None5