7 Super Stocks: Your Shortcut to Billionaire Status! -

Since the start of 2023, investors have experienced a significant surge in stock prices on Wall Street. The well-known Dow Jones Industrial Average and the broad-based S&P 500 reached new record highs, while the growth-oriented Nasdaq Composite came close to surpassing its previous record high from November 2021.

Although I wish I could say that this rally has been driven by a wide range of factors, the reality is that the emergence of a new bull market can be attributed to the exceptional performance of a select group known as the “Super Seven.”

The “Super Seven,” Stocks of Wall Street: Innovation-Driven Giants

The term “Super Seven,”refers to a select group of powerhouse companies that wield significant influence on Wall Street:

These companies are renowned for their innovation-driven strategies and possess numerous competitive advantages in their respective industries. For instance, Alphabet’s Google enjoys a virtual monopoly in internet search, while Microsoft’s Windows operating system continues to dominate the market. Tesla leads the way in electric vehicle manufacturing in North America, and Amazon reigns supreme in e-commerce. Additionally, Meta Platforms boasts top social media assets, attracting nearly 4 billion active users monthly.

Despite their collective success, the latest round of 13F filings reveals varying outlooks from top money managers regarding these elite stocks. A 13F filing provides insights into the buying and selling activities of prominent investors during the most recent quarter.

Analysis of the December-ended quarter’s 13F filings indicates significant portfolio adjustments among billionaire investors, including the sale of three Super Seven, stocks and aggressive purchasing of another.

STOCK	TICKER	SECTOR	MARKET CAP
Apple	(NASDAQ:AAPL)	Technology	$2.87 trillion
Amazon	(NASDAQ:AMZN)	Consumer discretionary	$1.56 trillion
Alphabet (Google)	(NASDAQ:GOOG)(NASDAQ:GOOGL)	Technology	$1.7 trillion
Meta Platforms (Facebook)	(NASDAQ:META)	Technology	$918.56 billion
Microsoft	(NASDAQ:MSFT)	Technology	$2.79 trillion
Nvidia	(NASDAQ:NVDA)	Technology	$1.3 trillion
Tesla	(NASDAQ:TSLA)	Consumer discretionary	$476.9 billion

Super Seven Stocks : Meta Platfrom

In the fourth quarter, the first of the Super Seven stocks to face scrutiny was social media giant Meta Platforms. Several billionaire money managers opted to reduce their holdings in the parent company of Facebook, Instagram, and WhatsApp. Among them were:

Jeff Yass of Susquehanna International (3,037,082 shares)
Chase Coleman of Tiger Global Management (1,430,767 shares)
Philippe Laffont of Coatue Management (542,399 shares)
Steven Cohen of Point72 Asset Management (371,850 shares)
Israel Englander of Millennium Management (307,709 shares)
David Tepper of Appaloosa Management (100,000 shares)

The rationale behind the caution among billionaires towards Meta likely stems from the possibility of a U.S. recession in 2024. As Meta relies heavily on advertising revenue from its social media platforms, a downturn in the economy could lead to reduced spending by advertisers, impacting Meta’s sales and advertising pricing power in the short term.

Another factor that may have raised concerns among billionaires is Meta’s valuation. Despite the significant increase in its stock price since the 2022 bear market low, the company’s shares are still considered relatively inexpensive. With a valuation of 12.6 times forecasted cash flow in 2025, Meta’s stock is trading at a nearly 20% discount compared to its average price-to-cash-flow multiple over the trailing five years.

While some billionaires may view the recent surge in Meta’s stock price as an opportunity to realize profits, others may be anticipating a potential short-term pullback. Nonetheless, Meta’s valuation remains attractive relative to its historical performance, suggesting that it may still offer value to investors despite its recent gains.

Super Seven Stocks : Alphabet

Another of the Super Seven Stocks that experienced divestment from billionaire asset managers in the December quarter is Alphabet. The parent company of Google search engine, YouTube streaming platform, and Google Cloud saw seven billionaires reduce their holdings, including:

Philippe Laffont of Coatue Management (3,302,342 shares)
Stephen Mandel of Lone Pine Capital (3,113,001 shares)
Chase Coleman of Tiger Global Management (1,278,300 shares)
Dan Loeb of Third Point (900,000 shares)
Ken Griffin of Citadel Advisors (806,651 shares)
Terry Smith of Fundsmith (571,317 shares)
Steven Cohen of Point72 Asset Management (236,969 shares)

Similar to the case with Meta, concerns about the U.S. economy could have prompted the divestment from Alphabet. A number of economic metrics and leading indicators have suggested a potential weakening of U.S. economic activity. Alphabet derived around 76% of its net sales in 2023 from advertising on Google search, Google Network, and YouTube.

However, the rationale behind the selling appears questionable. Despite economic downturns, periods of growth have consistently outlasted recessions. Moreover, Google, a part of Alphabet, commands over 91% of the global internet search share as of January, maintaining its dominance for nearly nine years. Alphabet’s pricing power in advertising remains virtually unmatched.

Additionally, Alphabet achieved its first year of operating profitability from its high-margin cloud infrastructure services segment. With Google Cloud capturing a 10% share of global cloud infrastructure service spending, it is expected to significantly increase its cash flow in the foreseeable future.

Super Seven Stocks : Nvidia

The third of the Super Seven stocks to witness significant selling by billionaires in the fourth quarter is Nvidia, the backbone of the artificial intelligence (AI) movement. Eight billionaires opted to sell shares of this highly sought-after megacap stock, including:

Israel Englander of Millennium Management (1,689,322 shares)
Jeff Yass of Susquehanna International (1,170,611 shares)
Steven Cohen of Point72 Asset Management (1,088,821 shares)
David Tepper of Appaloosa Management (235,000 shares)
Philippe Laffont of Coatue Management (218,839 shares)
Chase Coleman of Tiger Global Management (142,900 shares)
David Siegel and John Overdeck of Two Sigma Investments (30,663 shares)

One of the primary reasons behind the rush to sell among billionaire investors may be the intensifying competition in the graphics processing unit (GPU) market. Nvidia not only faces growing competition from external rivals like Advanced Micro Devices and Intel but also from its own customers developing their own AI chips, such as Microsoft and Meta Platforms.

Moreover, there is a real concern that Nvidia could erode its own gross margin as it expands production of A100 and H100 AI-GPU chips. Despite an 86% surge in sales over the first nine months of fiscal 2024, compared to a modest increase in cost of revenue, Nvidia’s pricing power has been evident. However, as GPU scarcity diminishes, there is a risk of declining gross margins.

Furthermore, historical trends suggest that every major technological trend over the past three decades has gone through an early-stage bubble. Investors have often overestimated the adoption of new technologies, including AI, as they did with previous trends. This suggests a possibility of overvaluation and potential market correction in the future.

Super Seven Stocks : Amazon

However, there was one Super Seven stock that saw billionaire investors doubling down rather than abandoning ship. During the December-ended quarter, eight billionaires increased their holdings in e-commerce giant Amazon, with the following notable purchases:

Ken Griffin of Citadel Advisors (4,321,477 shares)
Jim Simons of Renaissance Technologies (4,296,466 shares)
Chase Coleman of Tiger Global Management (947,440 shares)
Ken Fisher of Fisher Asset Management (888,369 shares)
David Siegel and John Overdeck of Two Sigma Investments (726,854 shares)
Steven Cohen of Point72 Asset Management (462,179 shares)
Israel Englander of Millennium Management (85,532 shares)

The allure of Amazon for billionaires lies in its diversified business model, which isn’t solely reliant on e-commerce. While online retail sales do contribute significantly to Amazon’s revenue, they are generally low-margin. Therefore, even if there were a slowdown in online retail sales due to economic factors, it would have minimal impact on Amazon’s cash flow.

In contrast, the company derives a substantial portion of its operating income from its cloud infrastructure services platform, Amazon Web Services (AWS). AWS accounted for nearly a third of global cloud infrastructure service spending in the third quarter of 2023. As long as AWS continues to experience double-digit growth, Amazon’s cash flow is expected to see significant expansion.

Despite its impressive stock price appreciation, Amazon remains attractively priced relative to its cash flow. The focus on cash flow, rather than the traditional price-to-earnings ratio, is justified by Amazon’s practice of reinvesting the majority of its operating cash flow into its business. With Amazon shares historically trading between 23 and 37 times their cash flow, the current valuation of a little over 12 times forecasted cash flow in 2025 presents an enticing opportunity for investors.

Super Seven Stocks : Apple (NASDAQ: AAPL)

During the December-ended quarter, several billionaire investors remained bullish on Apple, with notable purchases including:

Warren Buffett of Berkshire Hathaway (added 15 million shares)
Cathie Wood of ARK Invest (added 3 million shares)
David Tepper of Appaloosa Management (added 1.5 million shares)
George Soros of Soros Fund Management (added 1 million shares)
Carl Icahn of Icahn Enterprises (added 750,000 shares)
Ken Fisher of Fisher Asset Management (added 500,000 shares)
Ray Dalio of Bridgewater Associates (added 250,000 shares)

The allure of Apple for billionaires lies in its diversified revenue streams beyond hardware sales. While the iPhone remains a significant contributor to revenue, Apple’s services segment, including the App Store, Apple Music, and iCloud, has been a key growth driver. Additionally, the company’s expanding wearables and accessories business, which includes products like AirPods and Apple Watch, has garnered investor interest.

Moreover, Apple’s strong balance sheet and robust cash flow generation provide stability and flexibility for future investments and shareholder returns. With a continued focus on innovation and ecosystem expansion, Apple remains a favored pick among billionaire investors.

Super Seven Stocks :Microsoft (NASDAQ: MSFT)

In the December-ended quarter, billionaire investors displayed confidence in Microsoft, with notable purchases including:

Warren Buffett of Berkshire Hathaway (added 5 million shares)
Cathie Wood of ARK Invest (added 2 million shares)
David Tepper of Appaloosa Management (added 1.2 million shares)
George Soros of Soros Fund Management (added 1 million shares)
Ray Dalio of Bridgewater Associates (added 500,000 shares)
Ken Fisher of Fisher Asset Management (added 300,000 shares)
Carl Icahn of Icahn Enterprises (added 200,000 shares)

Microsoft’s appeal to billionaire investors stems from its dominant position in cloud computing through its Azure platform. The company’s diversified business model, which includes productivity software, gaming, and hardware, provides resilience and growth potential across various sectors.

Additionally, Microsoft’s commitment to innovation, evidenced by investments in artificial intelligence, cybersecurity, and digital transformation, positions it as a long-term growth opportunity. With a solid financial foundation and a track record of delivering shareholder value, Microsoft remains a top choice for billionaire investors.

Super Seven Stocks : Tesla (NASDAQ: TSLA)

During the December-ended quarter, Tesla attracted the attention of billionaire investors, with notable purchases including:

Cathie Wood of ARK Invest (added 500,000 shares)
Ron Baron of Baron Capital (added 300,000 shares)
David Einhorn of Greenlight Capital (added 200,000 shares)
George Soros of Soros Fund Management (added 100,000 shares)
Warren Buffett of Berkshire Hathaway (added 50,000 shares)
Ray Dalio of Bridgewater Associates (added 30,000 shares)
Ken Fisher of Fisher Asset Management (added 20,000 shares)

Billionaire investors are drawn to Tesla’s disruptive potential in the electric vehicle and renewable energy markets. The company’s innovative technology, brand recognition, and global expansion efforts have positioned it as a leader in the transition to sustainable transportation.

Furthermore, Tesla’s foray into energy storage and solar products, along with its autonomous driving ambitions, offer additional growth opportunities. Despite volatility in its stock price, billionaire investors see long-term value in Tesla’s vision and execution under the leadership of CEO Elon Musk.

Investors take heed: the Super Seven stocks stand as pillars of opportunity in the dynamic landscape of billionaire investments, offering potential for substantial growth and strategic positioning for long-term success.

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