There's an old saying that success begets success. When it comes to investing, many people take this adage to mean that it might make sense to look at what other successful investors are buying and follow their lead and make the same investments. I accept that. In the end, even if you don't get it, Overall If you have the same returns as others, you may be able to ride their tailwind and make a decent profit.
Fortunately for those looking to follow in the investment footsteps of billionaires, many of the world's biggest investors are required to disclose what they buy and sell on a quarterly basis. To see what asset managers are buying that can move the market, three Motley Fool contributors look at signs of what trades these leading investors are reporting. I looked for it.They discovered that billionaire investors were buying Nvidia (NASDAQ:NVDA), Starbucks (NASDAQ:SBUX)and chevron (NYSE:CVX). Read this article to find out why, and decide for yourself whether following these investor guides will help you build your own wealth.
These Magnificent Seven stocks are hot, hot, hot these days.
Eric Volkman (Nvidia): Billionaire Ray Dalio's monster hedge fund Bridgewater Associates is clearly committed to the future of artificial intelligence (AI). This is a strong signal sent by Bridgewater's recent more than quintupling of his position in Nvidia, one of the Magnificent Seven stocks more easily associated with AI.
Nvidia's trading stock is graphics processing units (GPUs), many of which are used to power AI capabilities in data centers. The rush to develop these features has sharply increased demand for all types of hardware needed to support them, and Nvidia GPUs are at the heart of this push.
No wonder the company's latest quarterly numbers were so impressive. Do you think doubling revenue year-over-year is a feat? Well, that's nothing compared to Nvidia's 265% improvement in fourth-quarter revenue and non-GAAP (adjusted) net income. Needless to say, this has increased by nearly 500%.
AI is a technology with a very long journey and can be applied to so many processes and systems that it has the potential to generate many revenue streams. If Nvidia's products continue to be at the center of this problem, a likely scenario, the company can expect to see more hard-hit quarters in the future.
One big note about Nvidia is that it has been on many investors' radar screens lately. It seems like almost every individual and institution in the market wants to have the stock in their portfolio. The stock's explosive valuation may be a thing of the past, as the company's valuation is extremely expensive despite its recent fundamentals being out of this world.
More than a quick jolt
jason hall (Starbucks): I recently noticed something interesting about Starbucks while reading its SEC Form 13-F filing. DE Shaw and Renaissance Technologies, two of the largest and most successful quantitative trading companies, both purchased stock in the most recent reported quarter. For those who don't know, the former and latter's two founders, David Shaw and Jim Simons, are collectively worth nearly $40 billion, making their two companies arguably the most It is one of two successful quantitative trading funds.
Both Shaw and Renaissance generate most of their revenue relatively quickly. Their business is at least in part about high-speed trading, leveraging data to place big bets on many stocks. For example, DE Shaw opened in almost 594 AD. new Added 1,607 more stock positions last quarter, completely sold out another 535 shares.that's all 2,700 Stock price for a single quarter.
It's unclear exactly when Shaw or Renaissance bought, held, or sold some of their Starbucks stock. But we do know that at the end of the quarter, both companies still owned a portion. And with the global coffee giant's stock price down more than 6% since the beginning of Q4 2023 and down 20% from its high, these companies may have an opportunity to profit in the short term. Highly sexual.
But that is their game. For individual investors, you can't win there.
But Starbucks looks very attractive in the long run. Business in China is recovering, with profits up 10%, and same-store sales in the U.S. are growing at a strong 5%. Management is targeting 15% to 20% growth in earnings per share this year as well. When you combine this growth with a reasonable price below 23x P/E and a dividend yield of over 2.5%, long-term investors can benefit from owning Starbucks.
Buffett thinks oil still has a future
chuck saletta (Chevron): Warren Buffett's berkshire hathaway The company recently decided to buy about 16 million shares of oil company Chevron, according to its recently released quarterly holdings report. This, in addition to Berkshire Hathaway's huge investment in energy pipelines, is another clear sign that Buffett and his crew believe there is still a future for hydrocarbon-based fuels. It is.
They are not alone in this regard. According to the latest report from the U.S. Energy Information Administration, Annual energy outlookNet demand for oil and natural gas is expected to remain relatively stable until at least 2050. And of course, in a world where demand remains stable for decades to come, it is unlikely that people will simply stop using these fuels altogether. As soon as 2051 approaches.
In reality, even assuming that carbon-based fuels have a limited future, at the right price, investors can make a decent profit by owning shares in companies involved. It's a value investing strategy based on the good old practice of considering what a company's cash flows will look like over time.
Trading at around 14 times earnings, investors don't need to expect significant growth to have a chance of making a decent return from Chevron. That's especially true when you realize that Chevron pays investors a decent dividend yield of around 4%.
Simply put, a stable 4% yield would allow investors to pay back their money over 25 years. This gives investors a potential path to fully recovering their invested capital over the period while still owning the dividend-producing stock. And of course, the demand can continue beyond that point, so you have the opportunity to earn even more.
Net — Even without a massive growth story, there's good reason to believe there's still value to be extracted from the oil patch. And if it's good enough for Buffett, it might be good enough for the rest of us.
Ready to follow these leading investors?
Ray Dalio's acquisition of NVIDIA, DE Shaw and Renaissance's ownership of Starbucks, and Buffett's acquisition of Barsky Hathaway's Chevron show there are many ways to profit from the market. These major investors seemed to follow three very different approaches to determining which stocks they thought were worth investing in.
This should be reason enough to believe that you, too, should be able to find a way to get a decent return on your investments. No one, not even successful millionaires, can guarantee what you will earn in the stock market. But as their long-standing success has shown, most of the money made in the market comes from simply showing up and following a rational strategy. time.
So start now and make today the day you decide to follow these great investors into the market, whether or not you actually buy the exact same investments they do.
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Chuck Saletta has no position in any stocks mentioned. Eric Volkman has no position in any stocks mentioned. Jason Hall has held positions at Berkshire Hathaway, Nvidia, and Starbucks. The Motley Fool has positions in and recommends Berkshire Hathaway, Chevron, Nvidia, and Starbucks. The Motley Fool has a disclosure policy.
“3 Stocks Billionaires Are Buying” was originally published by The Motley Fool.
