We recently compiled a list of the 10 Best Stocks To Invest In According to Billionaires. In this article, we are going to take a look at where Meta Platforms Inc (NASDAQ:META) stands against the other billionaire-approved stocks.
Billionaires and top hedge fund managers typically dominate the stock market, focusing on leading companies with strong track records and exceptional performance. They usually don’t waste time with underperformers—they target the market’s elite.
The Stock Market Rally
Before diving into the top stock picks among billionaires, reviewing how the market has performed so far this year is essential. On September 18, the Federal Reserve cut its policy rate by 50 basis points, lowering it to 4.75%–5.00% from 5.25%–5.50%. This move fueled a market rally, pushing stocks to a new intraday record high, and marking the 39th all-time high of 2024—the first since mid-July. Minneapolis Fed president Neel Kashkari acknowledged that while the rate cut was unusual historically, shifting the policy focus from controlling high inflation to addressing a weakening labor market was necessary. Here are some comments:
“Right now, we still have a strong, healthy labor market. But I want to keep it a strong, healthy labor market, and a lot of the recent inflation data is coming in looking very positive that we’re on our way back to 2%. So I don’t think you’re going to find anybody at the Federal Reserve who declares mission accomplished, but we are paying attention to what risks are most likely to materialize in the near future.”
Market expectations point to an equal probability of the Federal Open Market Committee (FOMC) cutting rates by either a quarter- or half-percentage point at its November meeting, with a higher chance of the larger reduction in December. Overall, markets are signaling the Fed’s intent to bring rates to a “neutral” level that neither stimulates nor restricts economic growth.
What the Top Dogs of Wall Street are Saying About the Market
For nearly two years, bulls have dominated Wall Street, driven by a resilient U.S. economy and growing enthusiasm around artificial intelligence (AI). This momentum has propelled the Dow Jones Industrial Average, the S&P 500, and the tech-heavy Nasdaq Composite to multiple record highs in 2024. Despite the surge, not everyone seems hopeful about the market, with some of the most influential billionaire investors, including Warren Buffett of Berkshire Hathaway, signaling caution. Buffett, known for his long-term optimism, has been a net seller of stocks for seven straight quarters.
On the other hand, billionaire investor Ray Dalio recently raised concerns about the “enormous amount of debt” burdening the U.S. economy. He cautions that neither former President Donald Trump nor Vice President Kamala Harris is likely to focus on addressing debt sustainability in the upcoming presidential election, suggesting that the pressure from the $35.3 trillion national debt will persist, regardless of the election outcome.
Our Methodology
In this article, we analyzed Insider Monkey’s exclusive database of billionaire stock holdings to select the 10 stocks with the highest number of billionaire investors. These billionaires are founders or managers of some of the world’s leading hedge funds and companies.
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 the best hedge funds. Our quarterly newsletter’s strategy selects 14 small-cap and large-cap stocks every quarter and has returned 275% since May 2014, beating its benchmark by 150 percentage points (see more details here).
A team of developers working in unison to create the company’s messaging application.
Meta Platforms Inc (NASDAQ:META)
Number of Billionaire Investors: 32
Meta Platforms, Inc. (NASDAQ:META) is a leading tech company known for its popular products like Facebook, Instagram, and WhatsApp. In addition to social media, it is a leader in AR/VR technology.
On September 23, Roth Capital expressed a positive outlook on Meta Platforms, Inc. (NASDAQ:META), citing strong growth in the company’s cost per thousand impressions (CPMs). Data from advertising agencies shows Meta’s CPM growth accelerating from 27% year-over-year in Q1 to 36% YoY in Q2, with Q3-to-date figures reflecting a 40% YoY increase. This consistent rise in CPMs, climbing from $5.62 in Q1 to $6.94 in Q3, signals robust demand for advertising on the company’s platforms.
Additionally, BofA Securities maintained its Buy rating, expecting Meta Platforms Inc. (NASDAQ:META) to launch new AI chat options and features for WhatsApp and Messenger. The firm also anticipates updates on Llama, Meta’s open-source language model, at an upcoming developer event. Additionally, Meta Platforms Inc. (NASDAQ:META) ended the second quarter with a strong cash position, holding $58.1 billion in cash, cash equivalents, and marketable securities. The company’s free cash flow for the quarter reached $10.9 billion, easily covering the $1.3 billion in dividends distributed.
According to Insider Monkey, 32 billionaires held stakes in Meta Platforms Inc. (NASDAQ:META) as of the most recent quarter.
Rowan Street Capital mentioned Meta Platforms, Inc. (NASDAQ:META) in its second-quarter 2024 investor letter:
“We are pleased to report that Meta Platforms, Inc. (NASDAQ:META), our largest position in the fund, has delivered a remarkable performance, +450% since our November 2022 note. Our investment in Meta dates back to 2018, with an average cost basis of approximately $172 per share. Today, the stock trades around $535, reflecting a 3x return over the six-year holding period, equating to a 20% annualized return.
We would like to remind you that achieving these types of returns is never a straight path. From time to time, we might experience volatility — that’s simply part of the investment journey. In fact, wealth creation and volatility go hand in hand. There’s no escaping it; it’s the “price of admission” the market demands. If you take a look at the chart below, you’ll notice the drawdowns META stock has faced over the years, with 2022 standing out as a particularly challenging period, where the stock saw a 75% drop…” (Click here to read the full text).
Overall META ranks 4th on our list of the stocks to invest in according to billionaires. While we acknowledge the potential of META as an investment, we believe that there are under-the-radar AI stocks trading at highly discounted valuations that hold greater promise for anyone looking to diversify their portfolio. If you are looking for an AI stock that is more promising than META, check out our report about the cheapest AI stock.
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Disclosure: None. This article is originally published at Insider Monkey.