Following billionaire investors into any trade can be difficult for many retail investors for a number of reasons. First, the trades these billionaires often report in their 13-F filings lag by about a month and typically cover trades that could have happened as much as four months earlier. These positions may already be off the books, having run their course.
But for certain billionaires who have held positions for some time (and added to them over time), the trends may be more favourable for real investors looking to assess particular stocks.
Here are three Canadian names billionaires seem to love, and why.
Source: Getty Images
Canadian National Railway
Among the top billionaire picks I continue to watch closely is Bill Gates’s favourite Canadian National Railway (TSX: CNR).
Shares of the Canadian railroad operator, which is one of the largest in North America, have been on a downtrend of late. That should be no surprise, given the headwinds associated with companies involved in intra-country trade in North America. The Trump administration has wreaked havoc on such stocks, with a recent dip in April that this company has yet to meaningfully recover from.
We’ll have to see if the narrative shifts. I expect it will over time. And with one of the best balance sheets in this oft-overlooked sector, I’d argue that CNR stock could be positioned for a nice move higher, if North America becomes the place global investors want to invest in again.
Cenovus Energy
I’ve found at least a dozen billionaires who have announced positions in Cenovus Energy (TSX: CVE), which, I have to admit, surprised me.
That said, I can also see why such influential investors decided to add exposure to this Canadian energy behemoth. As an integrated oil and natural gas company, Census has benefited from a robust energy market in recent years. That said, the company hasn’t sat on its laurels. By divesting of non-core assets and paying down debt, Cenovus now has a much more solid balance sheet, and it’s one investors seem to like relative to its peers.
Based on these cash flow improvements, analysts have upgraded the stock, and billionaires have put capital to work in this name. Those are the sorts of trends that are promising for retail investors like you and me, making this a stock I intend to follow closely from here on out.
Restaurant Brands
Billionaire Bill Ackman and others have added significant exposure to Restaurant Brands (TSX: QSR) in the past, each with their own unique take on why this Canadian fast-food giant is worth holding right now.
In my view, these billionaires are spot on about this Canadian darling, given the company’s defensive positioning in a sector that could see meaningful growth over time.
As the chart above shows, Restaurant Brands’s stock price has been stuck in a rut for years, and can’t really seem to break out. There are reasons for this, including expectations that growth could slow due to the rise of GLP-1 drugs and that global growth for these brands could wane.
We haven’t seen such a situation play out, and, in fact, Restaurant Brands’s management team has done a great job of executing its menu revamp plans and improving same-store sales. So long as the fundamental picture continues to improve for Restaurant Brands, this will be a top pick of mine moving forward.
