Taking a peek over the shoulders of the world’s smartest investors is never a bad idea. These billionaire money managers have done their research and can be a great source of new ideas.
Fortunately for investors, it has never been easier to track the trading decisions of billionaire investors and hedge funds. The SEC requires these Wall Street whales to file a report of their holdings every quarter. And while these tallies certainly lag their actual holdings, they still serve as a useful window into their thinking.
So which stocks are these investors buying now? Surprisingly, smart money managers are looking towards the market’s most hated names in search of value. Let’s take a look at their top stock picks.
BlackBerry (TSX:BB)(NASDAQ:BBRY) is once again in Bay Street’s good books. Shares have spiked some 56% since new Chief Executive John Chen took the helm last November. And over the last several months it’s becoming apparent that a turnaround is taking shape.
However, perhaps the most significant news is that one of the Street’s best known shareholder activists could be setting his sights on the company. According to recently filed 13F, activist investor Dan Loeb disclosed that he had initiated a position in the troubled smartphone device maker last quarter.
For those who are unfamiliar with that name, Mr. Loeb is the founder of Third Point LCC, a hedge fund with some $14 billion in assets under management. Founded in 1995, Third Point is known for shaking up complacent boardrooms with its activist style of investing. At present, it’s unclear if Third Point has activist plans for BlackBerry.
However, Mr. Loeb wasn’t the only investor buying BlackBerry shares. Famed investors Prem Watsa and Louis Bacon increased their stakes in the troubled smartphone company last quarter. And technology investing guru Josh Resnick also initiated a position in the firm.
It may seem shocking that hedge funds are moving into uranium given the negative headlines that have surrounded the industry since the Fukushima disaster in 2011. However, we have seen a number of hedge funds making sizable bets on the industry.
Last quarter billionaire investor George Soros almost doubled the size of his position in uranium mining giant Cameco (TSX:CCO)(NYSE:CCJ). Today, Soro’s total stake of common shares and call options is now worth $126 million. Other smart money operator are also optimistic. Billionaire investors including Louis Bacon, Steven Cohen, and Ray Dalio either initiated or increased their stakes in the company last quarter.
There are a couple of reasons to be optimistic. First, the Japanese government has toned down its anti-nuclear rhetoric. It is drafting a new energy plan that describes atomic energy as an “important source of electricity for Japan”. Second, low uranium prices have forced operators to close down projects and scale back production. Both developments should put a floor underneath uranium prices and are bullish for Cameco shares.
Silver Wheaton (TSX:SLW)(NYSE:SLW) was a popular pick amongst many hedge funds last quarter. Most notably billionaire Paul Tudor Jones, one of the most successful traders of the past century, initiated a small position in the company. Ray Dalio also increased his stake in the streaming metals business.
Silver Wheaton has taken advantage of the crisis in the mining industry to beef up its asset portfolio. Over the past two years the company has stepped up to provide financing for a number of cash-desperate mining projects. And because the terms of these deals have been particularly lucrative for Silver Wheaton, these ventures could be very rewarding for shareholders if metal prices recover.
Foolish bottom line
Investors shouldn’t rush out and buy any of the names on this list without doing their homework. We don’t, for example, know whether these hedge fund managers are purchasing these stocks because they’re bullish on the underlying businesses or as part of a larger trade.
However, an endorsement from the smartest minds on Wall Street is a positive sign. This certainly serves as a good starting point for further research.
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