Copying billionaires' trades is a tactic that's been used by retail investors for decades to build their portfolios. By tracking the buys and sells on quarterly 13-F filings from hedge fund managers and other deep-pocketed investors, investors can attempt to replicate the strategies used by the market veterans who have built their fortunes by picking critical winners across various market cycles.
Although this strategy may appear to be foolproof, timing is everything in the markets, and it's important to remember that these quarterly filings aren't real-time updates on what our favorite billionaire investors are doing with their stacks of capital. Plus, billionaires can also go wrong with their bets - whether it was Warren Buffett's heavy investment in Dexter Shoe in the nineties, or Carl Icahn's initial reluctance towards Apple (AAPL), even the most successful and celebrated investors have their personal portfolio horror stories.
With this in mind, here are five recent billionaire stock picks from the second quarter, all of which are consensus “Buy”-rated by Wall Street analysts. Here's a closer look at the latest high-profile purchases on these names.
#1. Nike
Founded in 1964, Nike (NKE) is easily one of the most recognizable sportswear brands in the world. The company is primarily engaged in designing, developing, marketing, and selling footwear, apparel, equipment, accessories, and services. The company operates through its Nike, Jordan, Converse, and Hurley brands, catering to a diverse customer base through a combination of wholesale, retail, and digital channels. Its market cap currently stands at a sizeable $125.6 billion.
Down 23.2% on a YTD basis, Nike stock offers a dividend yield of 1.74%.
During Q2, Bill Ackman's Pershing Square Capital Management Fund picked up a 3 million-share stake in the company, sending its shares soaring on the news.
Overall, analysts have a consensus rating of “Moderate Buy” for NKE stock with a mean target price of $90.50, which indicates an upside potential of about 8.7% from current levels. Out of 30 analysts covering the stock, 14 have a “Strong Buy” rating, 1 has a “Moderate Buy” rating, 13 have a “Hold” rating, and 2 have a “Strong Sell” rating.
#2. Arm Holdings
UK-based Arm Holdings (ARM) is a technology company that designs semiconductor intellectual property (IP) for mobile, embedded, and Internet of Things (IoT) devices. It licenses its architecture to chip manufacturers, who then integrate it into their processors. Arm doesn't manufacture chips; it earns revenue primarily through licensing fees and royalties. The company currently commands a market cap of $138.6 billion.
After its blockbuster IPO in October 2023, ARM stock has gained 76% on a YTD basis.
During the second quarter, billionaire investor Paul Singer's Elliott Investment Management bought about 150,000 ARM shares, building a new stake in the company worth about $24.5 million.
On Wall Street, analysts have rated ARM stock a “Moderate Buy,” with the mean target price of $137.73 indicating an upside potential of about 4% from current levels. Out of 24 analysts covering the stock, 16 have a “Strong Buy” rating and 8 have a “Hold” rating.
#3. Transocean
Founded in 1954, Transocean (RIG) is an international provider of offshore contract drilling services for oil and gas wells. The company owns and operates a fleet of mobile offshore drilling units, including drillships and semisubmersibles, which it leases to oil and gas exploration and production companies daily. RIG's current market cap is at about $4.89 billion.
RIG stock is down nearly 18% on a YTD basis.
During Q2, Elliott's Singer also added to his existing stake in Transocean stock, boosting his stake from 9.75 million shares to 11.9 million.
Overall, analysts consider RIG stock a “Moderate Buy,” with a mean target price of $7.33. This suggests an upside potential of about 41% from current levels. Out of 14 analysts covering the stock, 7 have a “Strong Buy” rating, 5 have a “Hold” rating, 1 has a “Moderate Sell” rating, and 1 has a “Strong Sell” rating.
#4. Ulta Beauty
Ulta Beauty (ULTA) is a leading retailer offering a wide range of cosmetics, fragrances, skincare, hair care, and salon services. The company operates both physical stores and an online platform, providing customers with convenient access to its extensive product assortment. Ulta's market cap is approximately $18 billion.
ULTA stock is down nearly 23% on a YTD basis.
Ulta has been in the news recently after it secured an investment from Berkshire Hathaway (BRK.B) during Q2, although the smaller size of the investment suggests it may not be a direct pick of billionaire boss Warren Buffett himself.
Overall, 25 analysts have rated ULTA stock a “Moderate Buy” on average, with a mean target price of $471.18. This indicates an upside potential of almost 25% from current levels. ULTA has garnered 15 “Strong Buy” ratings, 9 “Hold” ratings, and 1 “Strong Sell” rating.
#5. Kinder Morgan
Founded in 1997, Kinder Morgan (KMI) is a midstream energy infrastructure company that owns and operates pipelines, terminals, and other energy infrastructure assets. The company transports and stores natural gas (NGU24), crude oil (CLU24), and refined products. It also engages in carbon capture and sequestration. KMI's market cap currently stands at $47.4 billion.
KMI stock is up 21.3% on a YTD basis. Notably, the stock also offers a healthy dividend yield of 5.38%.
Celebrated investor Stanley Druckenmiller's Duquesne Family Office boosted its KMI stake during Q2, bringing its share count to 6.75 million from 3.88 million previously.
Overall, analysts have a consensus rating of “Moderate Buy” for KMI stock, with a mean target price of $22.19 - which denotes an upside potential of roughly 4% from current levels. Out of 19 analysts covering the stock, 6 have a “Strong Buy” rating, 1 has a “Moderate Buy” rating, 11 have a “Hold” rating, and 1 has a “Moderate Sell” rating.
