Billionaires Are Fond of These Five Stocks in 2016

Among over 700 hedge funds that we follow, more than 40 are funds managed or founded by billionaires who have managed to deliver exceptional returns over the years, which has increased both their credibility in judging market swings as well as their net worth. Every quarter we compile data on the equity holdings of these accomplished investors and share it with our readers. In this article we are going to take a look at the top five stocks that billionaires from our database are collectively bullish on, according to the latest round of 13F filings.

The main reason why we follow hedge funds is because our research has showen that imitating the most popular small-cap picks among them can generate substantial returns over the long term. Our analysis that covered the equity portfolios of several hundred hedge funds showed that this approach can help a retail investor beat the market by double digits annually (see more details here).

#5 Pfizer Inc. (NYSE:PFE)

– Number of billionaires invested in the company (as of December 31): 19

– Value of holdings (as of December 31): $4.19 Billion

Even though Pfizer Inc. (NYSE:PFE)’s stock price is down by more than 13% in the last 12 months, the number of billionaires holding the company in their portfolios rose by four during the fourth quarter and the total value of their positions surged by 52% on the quarter. Pfizer is set to acquire Allergan plc Ordinary Shares (NYSE:AGN) at $337 per share. Currently, the stock of the Botox maker is trading at a 16% discount to the  acquisition price, which has weighed on Pfizer as well. However, Allergan recently has posted strong financial results for the fourth quarter, which could give Pfizer’s stock a lift too. Americans for Tax Fairness group believes that Pfizer could potentially avoid paying taxes worth $35 billion, if the merger goes through. The Food and Drug Administration also recently has approved Pfizer’s New Drug Application for IBRANCE, medicine for breast cancer. Billionaire Ken Fisher‘s Fisher Asset Management is the largest stockholder of Pfizer Inc. (NYSE:PFE) within our database as it owns more than 32.33 million shares of the company as of the end of September.

#4 Microsoft Corporation (NASDAQ:MSFT)

– Number of billionaires invested in the company (as of December 31): 20

– Value of holdings (as of December 31): $8.03 Billion

The stock price of the Redmond-based tech giant rose by more than 27% during the fourth quarter. Subsequently, the number of billionaires invested in the company rose by two during the same period and the aggregate value of their holdings inched up by 7.4%. Microsoft Corporation (NASDAQ:MSFT) has recently acquired Xamarin, a provider of software tools for developing mobile apps, with customers including 100 of the Fortune 500 firms, for an undisclosed amount. A person familiar with the deal values the transaction between $400 million and $500 million. JANA Partners’ Barry Rosenstein upped his firm’s position in Microsoft Corporation (NASDAQ:MSFT) by 29% during the fourth quarter and now holds about 9.92 million shares.

#3 Facebook Inc (NASDAQ:FB)

– Number of billionaires invested in the company (as of December 31): 21

– Value of holdings (as of December 31): $3.59 Billion

Even though the stock price of the social networking company appreciated by more than 17% during the October-December period and by 35% over the last twelve months, the number of funds managed by high net worth individuals holding Facebook Inc (NASDAQ:FB) in their portfolios rose by three in the fourth quarter, but the total value of their investments increased only by $22 million. The company recently has released five new animated reactions alongside its ‘like’ button. This was a result of a year-old research that included focus groups and surveys in order to determine which reactions people would want to express more. Israel Englander‘s Millennium Management hiked its Facebook Inc (NASDAQ:FB) holding by 31% to 3.49 million shares during the last three months of 2015.

#2 Time Warner Cable Inc (NYSE:TWC)

– Number of billionaires invested in the company (as of December 31): 23

– Value of holdings (as of December 31): $5.05 Billion

The stock of the $54 billion cable service provider has gained 25% over the last year, amid Charter Communications, Inc. (NASDAQ:CHTR) agreeing to buy Time Warner Cable Inc (NYSE:TWC) for $78.7 billion, including its debt. The deal is still awaiting regulatory approval. New Jersey recently gave the merger the green light, but the main hurdle is California, where it is believed that the Public Utilities Commission is split about the decision. The Golden State is expected to unveil its final decision on May 12. Billionaire John Paulson‘s Paulson & Co reduced its stake in Time Warner Cable Inc (NYSE:TWC) by 28% to 5.87 million shares during the fourth quarter.

#1 Allergan plc Ordinary Shares (NYSE:AGN)

 – Number of billionaires invested in the company (as of December 31): 29

– Value of holdings (as of December 31): $9.53 Billion

While the total number of billionaires bullish on Allergan plc Ordinary Shares (NYSE:AGN) inched up by three, the aggregate value of their positions declined by 12% during the October-December period. The stock of the Ireland-based manufacturer of branded and generic pharmaceuticals has advanced by 10% during the same period, which could suggest that the decrease in aggregate value of holdings was a result of profit-taking moves amid the announcement of Allegan’s acquisition by Pfizer. The company recently received FDA approval for ACZONE gel 7.5%, which is used for the treatment of Acne Vulgaris. Andreas Halvorsen‘s Viking Global held more than 5.98 million shares of Allergan plc Ordinary Shares (NYSE:AGN) valued at $1.87 billion at the end of December.

Disclosure: None