iBillionaire: Stocks Billionaires Are Buying … and Selling

by Charles Sizemore | May 20, 2014 6:00 am

America’s financial-sector billionaires have had a busy year, at least based on the quarterly rebalancing of the iBillionaire Index[1].

[2]The index — which tracks the major, high-conviction portfolio holdings of billionaire investors such as Warren Buffett, George Soros Daniel Loeb and Carl Icahn — replaced six of its 30 holdings in its recent rebalancing.

Biotech play Actavis (ACT[3]) is a new addition to the index based on buying by Daniel Loeb, Steve Mandel and Leon Cooperman in the first quarter. Also joining the index are “old tech” names eBay (EBAY[4]) and Microsoft (MSFT[5]), energy infrastructure play Halliburton (HAL[6]), consumer staples stalwart Procter & Gamble (PG[7]) and retail behemoth Walmart (WMT[8]), which I recently highlighted as a serial dividend raiser[9].

And what’s getting booted out? A few names that might surprise you.

Dialysis provider Davita (DVA[10]), which has been a favorite of Warren Buffett’s Berkshire Hathaway (BRK.B[11]) in recent years, is getting bumped, as are General Motors (GM[12]), Transocean (RIG[13]) and FedEx (FDX[14]). But the two most noteworthy deletions are former momentum darling Netflix (NFLX[15]) — which Carl Icahn massively reduced last quarter after enjoying more than 400% returns — and Yahoo (YHOO[16]) — which is front and center in the pending Alibaba IPO. Daniel Loeb, a long-time Yahoo bull, closed his position in the first quarter.

I highlighted the iBillionaire Index[17] in February, comparing it to some of the other “guru following” strategies out there, such as those followed by the Global X Top Guru Holdings Index ETF (GURU[18]) and the AlphaClone Alternative Alpha ETF (ALFA[19]).

The basic rationale behind all three guru-following strategies is the same: You’re looking to piggyback on some of the best ideas of the brightest minds in the business — without having to meet the net worth requirements or onerous account minimums that would come with investing in the gurus’ hedge funds themselves.

I like all three strategies and consider all to be great “fishing ponds” to look for ideas. But of the three, iBillionaire’s strategy is the only one for which the S&P 500 is a relevant benchmark. It selects the 30 top S&P 500 stocks based on ownership by billionaire fund managers, and it’s long-only. GURU and ALFA are tilted more towards mid caps, and AFLA actually has the ability to hedge by going short.

I’ll leave you with one parting thought. While rank-and-file investors have largely lost interest in Apple (AAPL[20]), the maker of the iconic iPhone remains the largest holding in the iBilionaire index by a wide margin — AAPL makes up fully 10.83% of the 30-stock portfolio. So, while Apple may no longer excite the investing public, the masters of the investing universe still seem to see a lot of value.

Charles Lewis Sizemore, CFA, is the editor of Macro Trend Investor[21] and chief investment officer of the investment firm Sizemore Capital Management. As of this writing, he was long DVA, MSFT, PG and WMT. Click here[22] to receive his FREE weekly e-letter covering top market insights, trends, and the best stocks and ETFs to profit from today’s best global value plays.

Source URL: https://investorplace.com/2014/05/ibillionaire-stocks-billionaires-buyingand-selling/

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