We recently compiled a list of the Obama Stock Portfolio: 10 Year Returns. In this article, we are going to take a look at where Meta Platforms Inc (NASDAQ:META) stands against the other stocks in former U.S. president Barack Obama’s portfolio.
Former United States President Barack Obama took office during one of the worst recessions in U.S. history, yet the stock market reached new highs during his tenure. Stepping into office in 2009, the year after stocks plummeted nearly 40% amid the financial crisis of 2007-2008, Obama made a remarkably well-timed market prediction. On March 3, 2009, just days before the S&P 500 hit an intraday low of 666 and a closing low of 676.53, the then-president stated, “What you’re now seeing is profit-and-earnings ratios are starting to get to the point where buying stocks is a potentially good deal if you’ve got a long-term perspective on it.” By the time he left office on January 20, 2017, the S&P 500 had soared to 2,263.69, reflecting a gain of about 225% since his predictive remark.
The “Obama Years” coincided with rapid technological advancements that significantly impacted the stock market. Apple Inc.’s iPhone, introduced less than two years before he took office, exemplified this era of innovation. In addition, during Obama’s presidency, billionaire Reed Hastings transformed Netflix Inc. from a DVD rental-by-mail company into a video-streaming giant, revolutionizing entertainment consumption. On the other hand, renewable energy, particularly solar energy, struggled during the president’s tenure. Despite the administration’s solar subsidies, investors were largely disappointed as those subsidies eventually faded. First Solar Inc., one of the largest U.S. solar equipment producers, saw its stock plummet by as much as 74% due to falling solar panel prices, making it the worst-performing S&P 500 stock of the Obama era.
How Did the Obamas Make Their Money?
From speaking at events worldwide to writing memoirs and signing a major production deal with Netflix, the Obamas have led a busy and highly lucrative life post-White House. Michelle Obama’s first memoir, “Becoming,” published in November 2018, became that year’s No. 1 best-selling book. Her second book, “The Light We Carry: Overcoming in Uncertain Times,” also achieved bestseller status. Similarly, Barack Obama’s latest memoir, “A Promised Land,” sold nearly 890,000 copies within 24 hours of its November 2020 release. These ventures, along with the six-figure pension that all former presidents receive, have significantly boosted the Obamas’ net worth, which is at least $70 million according to the International Business Times. The New York Post, however, estimates their fortune to be much higher, at $135 million.
Of course, Barack Obama’s income isn’t limited to speaking fees and pensions. Like many other wealthy individuals, he has invested significantly in the stock market. So what does his portfolio look like? When he took office in 2009, Obama, like all presidents, was required to make financial disclosures by law. At that time, Obama held $200,000-$450,000 in the Vanguard 500 Index Fund Investor Shares that tracks the S&P 500 index, according to a report by CBS News.
Our Methodology
These investments were selected from the top holdings of the Vanguard 500 Index Fund Investor Shares, one of Barack Obama’s primary investments during his presidency, according to official disclosures. We have provided each stock’s trailing 10-year returns to assess their performance over the decade. Data from approximately 919 elite hedge funds tracked by Insider Monkey in the fourth quarter of 2024 was also analyzed to determine the number of hedge funds holding stakes in each firm.
Why are we interested in the stocks that hedge funds pile into? The reason is simple, our research has shown that we can outperform the market by imitating the top stock picks of best hedge funds. Our quarterly newsletter’s strategy picks 14 small and large-caps every quarter and it has returned 275% since May 2014, beating its benchmark by 150 percentage points (see more details here).
Note: The stocks are sorted in ascending order of their trailing 10-year returns.
A team of developers working in unison to create the company’s messaging application.
Meta Platforms Inc (NASDAQ:META)
Number of Hedge Fund Holders: 246
Trailing 10-Year Returns: 23.14%
Meta Platforms Inc. (NASDAQ:META) is one of the elite stocks in the Vanguard 500 Index Fund Investor Shares (NASDAQ:VFINX) that Barack Obama held stakes in during his time in office.
In the first quarter, Meta Platforms Inc. (NASDAQ:META) reported a 27% increase in revenue, reaching $36.5 billion, with a significant 97% of this revenue generated from ads. Looking ahead to 2024, Meta’s ad revenue is projected to grow by 17%. Reels, which has been showing strong performance and engagement recently, experienced a 20% ad load in the first quarter, up from 16.2% in the same quarter last year.
The social media giant has been drawing attention for several reasons. For example, BMO Capital has maintained its Market Perform rating for META following an interview with Instagram Head Adam Mosseri. The interview revealed that Instagram is boosting performance bonuses for content creators and underscored the potential need for new revenue streams within the app. Additionally, the U.S. Supreme Court is reviewing a shareholder lawsuit against Meta Platforms Inc. (NASDAQ:META), led by Amalgamated Bank, which alleges misleading information about user data misuse in 2017 and 2018.
Conversely, Mizuho analysts have raised concerns about potential challenges for META stock in a recent research note, despite maintaining a bullish stance. Mizuho is particularly worried about possible announcements during the upcoming July earnings call. They expect the CEO to discuss increased capital expenditures (capex) for AI and metaverse initiatives, which could be negatively received by investors.
In the March quarter of this year, Insider Monkey’s data indicated that 246 out of the 919 hedge funds tracked had purchased and held shares of Meta Platforms, Inc. (NASDAQ:META). Among these, Rajiv Jain’s GQG Partners emerged as the largest stakeholder, with a $5.58 billion investment in the company.
RiverPark Large Growth Fund stated the following regarding Meta Platforms, Inc. (NASDAQ:META) in its first quarter 2024 investor letter:
“Meta Platforms, Inc. (NASDAQ:META): Meta was a top contributor in the quarter following fourth quarter earnings results in which the company reported accelerating revenue growth and expanding margins driven by a rebound in online advertising and strong user growth. On February 2nd, Meta reported 4Q23 revenue of $40.1 billion (+25% y/y up from +23% in 3Q23) and EPS of $5.33 (+203% y/y), and the midpoint of 1Q24 revenue guidance was $35.8 billion (+25% y/y), all well ahead of investors’ expectations. The company reported impressive revenue acceleration in its core advertising businesses, including new products like Reels and Threads. Advertiser adoption of Meta’s AI targeting tools helped drive strong ROI and higher spend across multiple categories.
META owns multiple social media platforms, each with more than one billion users, has an 81% gross margin, and generated $44 billion of FCF in 2023. Both its Facebook and its Instagram franchises have more than 2 billion Daily Active Users and generate the bulk of the company’s revenue. Recently, the company’s short form video offering, Reels, and public text-sharing app, Threads, achieved mass user engagement and growing advertiser adoption which have helped return the company to strong revenue and free cash flow growth. Even after the recent stock price advance, META shares trade at 20x Wall Street’s consensus estimates for 2025 EPS, estimates that we think could prove to be too low.”
Overall META ranks 7th on our list of former U.S. president Barack Obama’s portfolio stocks. You can visit Obama Stock Portfolio: 10 Year Returns to see the other stocks that are on hedge funds’ radar. While we acknowledge the potential of META as an investment, our conviction lies in the belief that AI stocks hold greater promise for delivering higher returns, and doing so within a shorter timeframe. If you are looking for an AI stock that is as promising than META but that trades at less than 5 times its earnings, check out our report about the cheapest AI stock.
Disclosure: None. This article is originally published at Insider Monkey.