5 Stocks Billionaires Love Right Now

by Tom Taulli | February 17, 2012 8:41 am

5 Stocks Billionaires Love Right Now

This week, many top hedge fund managers released their quarterly holdings — a result of a requirement from the Securities and Exchange Commission.

No doubt, hedge fund managers would like to see this rule go away. But for now, it’s here, and these regular reports can provide some valuable insight to regulator investors. Let’s take a look at five stocks billionaires love right now:

Research In Motion

BlackBerry maker Research In Motion (NASDAQ:RIMM[1]) is getting squeezed by Apple (NASDAQ:AAPL[2]) and Google (NASDAQ:GOOG[3]), and its new CEO seems clueless[4].

Yet Leon Cooperman, who manages the Omega Advisors fund and is worth $1.8 billion, picked up 1.5 million shares of RIMM in the fourth quarter, bringing his total position to nearly 3 million.

What could be the rationale? Well, Cooperman is known for taking contrarian views, so RIMM certainly fits that bill. And right now, it’s extremely tough to find any bulls on the stock, which might mean there could be some upside. The fact is the smartphone market continues to grow at a hefty rate, and RIMM still has a large user base. And you can expect buyout rumors to persist, which could further juice the stock price.

Reliance Steel

Steven Cohen, the manager of SAC Capital who has a net worth of about $9.3 billion, purchased 1.2 million shares of Reliance Steel (NYSE:RS[5]) in the fourth quarter.

Reliance Steel is a metals processor — such as for galvanized and finished steel — with operations across the U.S., China and Mexico. In its latest quarterly report, Reliance posted a 29% increase in sales to $2.1 billion, and the company has a strong footprint in growth industries like energy and farm equipment.

DaVita

Berkshire Hathaway’s (NYSE:BRK.A[6], BRK.B[7]) Warren Buffett purchased 2.7 million shares of dialysis treatment provider DaVita (NYSE:DVA[8]) in the prior quarter, among other big moves[9].

DaVita is a top provider of kidney care in the U.S., with 1,777 facilities. A lot of the company’s growth has come from acquisitions, and DaVita has ambitions to expand into foreign markets.

As with any Buffett pick, the company has strong cash flow generation. DaVita reported operating cash flow of $1.18 billion for 2011 when it released earnings Thursday evening. Fourth-quarter and full-year earnings also grew and beat analyst expectations.

Comverse Technology

Billionaire investor George Soros likes this one. He purchased 14.7 million shares of Comverse Technology (NASDAQ:CMVT[10]) in the quarter.

Comverse develops an assortment of technologies that focus on the needs of the communications industry. CMVT has more than 450 customers, which serve more than 2 billion subscribers.

CMVT stock has been horrible, though, losing 70% of its value in the past five years. However, Comverse is making attempts to streamline its operations, including recently announced plans to spin off its billing software business. Perhaps Soros believes such moves will be a catalyst to get the stock moving in the right direction.

Life Technologies

Ray Dalio manages one of the world’s top hedge funds, Bridgewater Associates, and is worth roughly $6.5 billion. In the latest quarter, he purchased 274,129 shares of Life Technologies (NASDAQ:LIFE[11]).

LIFE is in the genomics business, analyzing DNA to help conquer disease. The company recently announced that by the end of the year, it plans to have a machine that will sequence a person’s DNA for $1,000 (the current cost is about $3,000). This would be a game-changer and likely would result in a growth spurt for the company.

And Life Technologies already has a solid business. Last year, it generated revenues of $3.7 billion and cash flows of $710 million. However, the company ultimately might be the target of a buyout as personalized medicine becomes a strategic focus for the health care industry.

Tom Taulli runs the InvestorPlace blog IPO Playbook, a site dedicated to the hottest news and rumors about initial public offerings. He also is the author of “All About Short Selling”[12] and “All About Commodities.”[13] Follow him on Twitter at @ttaulli[14]. As of this writing, he did not own a position in any of the aforementioned securities.

Endnotes:
  1. RIMM: http://studio-5.financialcontent.com/investplace/quote?Symbol=RIMM
  2. AAPL: http://studio-5.financialcontent.com/investplace/quote?Symbol=AAPL
  3. GOOG: http://studio-5.financialcontent.com/investplace/quote?Symbol=GOOG
  4. its new CEO seems clueless: http://investorplace.com/2012/01/research-in-motion-ceo-thorsten-heins-rimm/
  5. RS: http://studio-5.financialcontent.com/investplace/quote?Symbol=RS
  6. BRK.A: http://studio-5.financialcontent.com/investplace/quote?Symbol=BRK.A
  7. BRK.B: http://studio-5.financialcontent.com/investplace/quote?Symbol=BRK.B
  8. DVA: http://studio-5.financialcontent.com/investplace/quote?Symbol=DVA
  9. among other big moves: http://investorplace.com/2012/02/berkshire-media-warren-buffett-todd-combs-dtv-lmca/
  10. CMVT: http://studio-5.financialcontent.com/investplace/quote?Symbol=CMVT
  11. LIFE: http://studio-5.financialcontent.com/investplace/quote?Symbol=LIFE
  12. “All About Short Selling”: http://www.amazon.com/All-About-Short-Selling/dp/0071759344/ref=sr_1_1?s=books&ie=UTF8&qid=1302184310&sr=1-1
  13. “All About Commodities.”: http://www.amazon.com/All-About-Commodities/dp/0071769986/ref=ntt_at_ep_dpi_10
  14. @ttaulli: https://twitter.com/ttaulli

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