Billionaires Love These Consumer Stocks

Consumer stocks have been doing well due to increasing disposable income and a growing population. However, with Donald Trump winning the elections, there have been a lot of speculation around these stocks. While on one hand the infrastructure sector is destined to perform well, on the other hand the policy of free movement of goods in and out America is at risk. This coupled with an anticipated rate hike could also affect spending on consumer goods. However, billionaires have increased their holding of consumer stocks which we have listed below. It is a good idea to follow their strategy since we could benefit from their extensive skills and experience.

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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Visa Inc (NYSE:V) witnessed a surge in the holdings of funds managed by billionaires during the third quarter, rising to $4.22 billion from $3.84 billion in the earlier quarter. The number of such funds also increased by 4 to 19, quarter over quarter. Amongst the billionaires’ funds that we track, Dan Loeb’s Third Point, D.E Shaw, Steve Cohen’s Point72 Asset Management bought 2.1 million, 1.575 million and 0.815 million shares of Visa Inc (NYSE:V) respectively during the quarter ending September. Dan Loeb’s Third Point was amongst the top five largest buyers of the stock during the quarter. The stock has returned more than 250% in the last five years and currently has a mean average recommendation of overweight. Visa Inc (NYSE:V) reported $4.26 billion in revenues for the quarter ending September which was an increase of $631 million quarter over quarter. This payment technology company also saw the value of hedge fund holdings increase by $932 million to $10.2 billion in the third quarter.

A total of 17 funds, (up from 11 in the earlier quarter) managed or launched by billionaire investors reported stakes in Home Depot Inc (NYSE:HD) as per their latest 13F filings. Top funds included D.E. Shaw, Steve Cohen’s Point72 Asset Management and Israel Englander’s Millennium Management. Overall, these funds held $432.9 million worth of the company’s stock. Point72 Asset Management bought 359,738 additional shares of Home Depot Inc (NYSE:HD) during the third quarter. With a net profit margin of 8.5% and a dividend yield of 2.1%, the stock has returned more than 250% in the last five years. The stock which has a mean recommendation of overweight is expected to perform well as the real estate sector should gain under the new Trump administration. The number of hedge funds long on Home Depot Inc (NYSE:HD) during the third quarter increased to 72 from 67 in the quarter earlier. However, the value of their holdings declined by ~$64 million quarter over quarter.

For the quarter ending September, Charter Communications, Inc. (NASDAQ:CHTR) holdings amongst billionaires’ funds decreased slightly to 15 from 16 in the earlier quarter. Stephen Mandel’s Lone Pine Capital was the tenth largest buyer of the stock during the third quarter. The fund bought 457,698 shares, increasing its stake to 6.33% from 5.06% in the prior period. The acquisition of Time Warner Cable Inc (NYSE:TWC) and Bright House Networks by Charter Communications, Inc. (NASDAQ:CHTR) has made it the second largest broadband provider and third largest pay TV provider in USA. The stock has rallied in 2016 returning more than 53% year to date and has a mean analyst recommendation of overweight. During its latest quarter, Charter Communications, Inc. (NASDAQ:CHTR) reported higher profits and a more than 7% increase in revenues. Though the aggregate value of hedge funds holding in this stock remained flat at $18.5 billion, the number of funds having Charter Communications, Inc. (NASDAQ:CHTR) in their portfolios came down significantly to 112 from 134 quarter over quarter.

15 funds run by billionaires held stakes in Comcast Corporation (NASDAQ:CMCSA) at the end of September. The number of funds increased from 14 in the earlier quarter and the aggregate value of their holdings also increased by $159 million during the June-September period. Point72 Asset Management managed by billionaire Steve Cohen bought 2 million shares of this media giant and it made up nearly 1% of the fund’s portfolio at the end of the third quarter.  Currently trading very near to its 52 week high price, the stock has gained 13% over the last one month. The company gives a good dividend yield of 1.6%, even with a P/E of 20x. Comcast Corporation (NASDAQ:CMCSA) reported a net income of $2.2 billion for the quarter ending September, which rose from $2 billion in the earlier quarter. As per our records, the number of hedge funds having this stock in its portfolio declined to 83 in the third quarter from 88 in the quarter earlier.

Mondelez International Inc (NASDAQ:MDLZ) was present in the equity portfolios of 13 billionaires at the end of the third quarter, which held a total of $4.15 billion worth of this stock. Amongst the billionaires we follow, Jana Partners managed by Barry Rosenstein bought more than 3.3 million shares of this stock. This made it the fourth largest buyer during the third quarter. Englander’s Millennium Management also reported having a stake in the company according to its latest 13F filing. Mondelez International Inc (NASDAQ:MDLZ) could be adversely affected by a change in the global trade policies of USA which President elect Donald Trump intends to implement. Israel For its most recent quarter ending September, Mondelez International Inc (NASDAQ:MDLZ) reported revenues of $6.4 billion which declined by 6.6% on a year on year basis. The stock has an average rating of overweight and has declined by 4% year to date. As per our database, 53 hedge funds held shares worth $5.9 billion in the stock down from 62 funds holding $6.68 billion worth of shares in the second quarter.

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