Tracking the habits of rich and successful investors like Warren Buffett is typically a good idea because they clearly know how to make a lot of money in the markets.
But Buffett isn't the only successful billionaire investor. Dozens of billion-dollar hedge fund managers and other extremely wealthy investors also know how to pick winning stocks.
Fortunately for the retail investor, the Securities and Exchange Commission (SEC) requires that such heavy hitters file a report on their long positions every quarter.
While the reports (called a Form 13F) lag the actual holdings of the billionaire investors and hedge funds, they serve as a useful window into the thinking of the country's most highly rewarded investors.
Several Websites track the Form 13F filings and look for patterns that retail investors can use.
One such site, Insider Monkey, tracks the 13F filings from 400 top hedge funds and billionaire investors.
In addition to Buffett's Berkshire Hathaway (NYSE: BRK.A, BRK.B), Insider Monkey tracks such well-known hedge fund managers as Carl Icahn (Icahn Capital Lp), David Einhorn (Greenlight Capital), John Paulson (Paulson & Co.), and George Soros (Soros Fund Management).
Although hedge funds have had a difficult year overall, the stocks they buy and hold have generally outperformed the market, the site notes.
Earlier this year Insider Monkey filtered out the 30 most popular stocks among these high-octane investors, to create what it calls the Billionaire Hedge Fund Index. That index is up 25.3% for the year, besting the 18% gain of the Standard & Poor's 500 Index.
Let's take a look at these winning top stock picks.
Five Top Billionaire Hedge Fund Stocks
Insider Monkey has released the top five stocks on that list of most popular. This group of U.S. stocks really shined in 2012, with an average return of 33.9%. They are:
1. Apple Inc. (Nasdaq: AAPL): While it's no surprise to see that Apple is popular among billionaire hedge fund managers, that Apple is No. 1 shows these experts have faith the stock still has upside even after its insane climb over the past year.
2. Google Inc. (Nasdaq: GOOG): The search giant, while pricey, is expected to increase its earnings by almost 20% a year for the next several years.
3. Qualcomm Inc. (Nasdaq: QCOM): Fund managers no doubt picked up Qualcomm when its price dipped in May and June, but the stock is still below its high for the year.
4. Microsoft Corp. (Nasdaq: MSFT): Yet another tech giant makes the list. But Microsoft? The stock that went into a coma for a decade? In fact, Microsoft is up nearly 17% year-to-date, so maybe the billionaires are on to something.
5. News Corp. (NYSE: NWSA): A real surprise, News Corp. got the attention of hedge fund managers last year when the stock fell to $15. Since the company announced at the end of June plans to split into two companies, the stock is up 11% to $24.75.
Investors: Want to play Apple without shelling out nearly $700 per share? .
Stocks Hedge Funds Love – And Hate
Another Website, Whale Wisdom, offers lots of statistical information and ways to search the data disclosed in 13F filings.
For example, Whale Wisdom lets you see which stocks had the largest increase in the most recent batch of 13F filings, as well as which ones had the biggest decrease.
So taking a look at these charts can give investors a good idea which stocks are the current darlings and which the dogs in the collective opinion of the billionaire investors.
The top five stocks that saw the biggest increases in total shares held in the June quarter were:
- Kinder Morgan Inc. (NYSE: KMI), 86.65% increase;
- Vodafone Group plc (Nasdaq ADR: VOD), 41.65% increase;
- American International Group (NYSE: AIG), 32.79% increase;
- Express Scripts Inc. (Nasdaq: ESRX), 32.35% increase;
- Johnson & Johnson (NYSE: JNJ), 17.66% increase.
The five stocks that saw the biggest decrease in holdings were:
- El Paso Corp., 99.9% decrease (acquired by Kinder Morgan)
- The Bank of Ireland (NYSE ADR: IRE), 99.78% decrease;
- Popular Inc. (Nasdaq: BPOP), 90.16% decrease;
- Freescale Semiconductor (NYSE: FSL), 29.94% decrease;
- Petroleo Brasileiro Petrobras (NYSE ADR: PBR.A), 19.50% decrease.
While no investor should buy or sell stocks based purely on the activities of billionaire hedge funds managers, it is worth bearing in mind that these folks do this for a living.
"Our billionaire hedge fund managers became billionaires because of their stock picking ability,"
wrote Insider Monkey co-founder Meena Krishnamsetty. "Their recent performance shows that they still have their magic touch."
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- Money Morning:
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- Money Morning:
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- Insider Monkey:
10 Most Popular Stocks Among Hedge Funds – Q1 2012
America's Richest Hedge Fund Managers
- Whale Wisdom:
13F Statistics for 06/30/2012