Editor’s note: This article was first published in August 2012, and its portfolio data are from the first half of 2012, with purchases from January to June; positions have certainly changed since. Wells Fargo and Grifols rankings refer to August 2012, and Coventry Health Care was acquired by Aetna in 2013.
It isn’t an exact science, but if we look at the track record of the investments made by major investors of the calibre of Soros and Warren Buffett, apart from a few notable blunders, such as Facebook for Soros and the Chinese carmaker BYD for Buffett (investments that ended up costing these investors money), the truth is that as a rule they make positive returns year after year. In other words, the stocks they invest in for the long term tend to go up.
The Wall Street Journal, through MarketWatch, has analysed the stocks these big investors trust so much that they have increased their exposure to them in 2012.
Five major investors, through their investment firms (Berkshire Hathaway – Warren Buffett, Soros Fund Management – George Soros, Greenlight Capital – David Einhorn, Baupost Group – Seth Klarman and Pershing Square Capital Management – Bill Ackman), are betting on these 10 stocks as potential winners over the medium to long term.
Warren Buffett
Mr Buffett is betting on banking, specifically on the fourth-largest bank in the United States, Wells Fargo & Co. Between January and June this year he bought 27.3 million new shares, making it the second-largest holding in his investment portfolio, after Coca-Cola.
Buffett has also bought 16.9 million new shares in Bank of New York Mellon Corp, since the bank has lost 50% of its value from the highs it reached in 2007.
General Motors Co is another of Berkshire Hathaway’s bets.
Buffett’s strategy, according to WSJ analysts, is to invest in stocks that have been hit hard and have received government support, and to choose shares in companies that have a profitable business model and are too big to fail.
George Soros
Soros is betting on Wal-Mart, buying 4.5 million shares, even though Soros himself sold out of the company years ago. His argument is that Wal-Mart tends to rise when there are doubts about the global economy or hard times are approaching. For Soros, hard times are approaching.
George Soros’s other bet is General Electric, where he has acquired 8.4 million shares.
Seth Klarman, David Einhorn and Bill Ackman
Seth Klarman is known in the United States as an ace at short-term investing, with a real passion for buying small-cap stocks or small biotech companies.
That’s why his bet on Oracle stands out: he has bought 15.8 million shares in the company. Oracle had raised doubts among analysts, and in the end it has gained more than 20% since May.
David Einhorn is confident in healthcare companies, including pharmaceutical firms and health insurers, because he thinks these stocks aren’t punished by the market in times of crisis. In fact, in Spain we can see this in the case of Grifols, the second-best performer on the Ibex after Inditex.
Einhorn’s bets are Coventry Health Care and Cigna Corp.
And finally, Bill Ackman is betting on consumer goods from top-tier brands, such as Colgate-Palmolive Company and Kimberly-Clark.
As we can see, there is a wide variety of choices in this select club of millionaire investors. Nor are they missing out on a few small purchases in companies that supply tech firms.
Further reading
Featured image: Gartner, Rudolph, Public domain, via Wikimedia Commons.
