The handful of hedge fund billionaires have not become billionaires out of thin air; their talent, expertise and experience at picking stocks are the main features that have assisted them in becoming so successful and wealthy. This is one of the key reasons why one should track billionaires’ moves, as they might point to great buying opportunities. The Insider Monkey team monitors over 40 billionaire hedge fund investors and we definitely reckon that their top stock picks should not be overlooked. However, we decided to take a different angle in this article. The following article will discuss the least favored Dow Jones Industrial Average stocks by the billionaires tracked by our team. So, let’s take a look at what billionaire hedge funds have to say about the five least preferred stocks from the 30 companies included in the Dow, and their performance over the past few months.
At Insider Monkey, we track hedge funds’ and billionaires’ moves in order to identify actionable patterns and profit from them. Our research has shown that hedge funds’ large-cap stock picks historically underperformed the S&P 500 Total Return Index by an average of seven basis points per month between 1999 and 2012. On the other hand, the 15 most popular small-cap stocks among hedge funds outperformed the S&P 500 Index by an average of 95 basis points per month (read the details here). Since the official launch of our small-cap strategy in August 2012, it has performed just as predicted, returning 102% and beating the market by more than 53 percentage points. We believe the data is clear: investors will be better off by focusing on small-cap stocks utilizing hedge fund expertise (while avoiding their high fees at the same time) rather than large-cap stocks.
#5 Goldman Sachs Group Inc. (NYSE:GS)
The number of billionaires invested in Goldman Sachs Group Inc. (NYSE:GS) at the end of the second quarter stood at six, compared with seven registered in the previous quarter. Even so, the value of their investments increased to $3.17 billion from $2.67 billion quarter-over-quarter. The shares of Goldman Sachs have lost more than 10% since the end of the second quarter, and are down by slightly over 3% year-to-date. Even though the bank delivered disappointing third quarter earnings results, its investment management business has been steadily strengthening. Goldman Sachs’ investment management revenues reached $1.42 billion in the third quarter, down by 3% year-over-year. However, the total assets under supervision increased by $6 billion to $1.19 trillion, so this business will represent a key source of revenue for the bank in the upcoming quarters. Edgar Wachenheim’s Greenhaven Associates owns 3.32 million shares of Goldman Sachs Group Inc. (NYSE:GS) as of September 30.
#4 United Technologies Corporation (NYSE:UTX)
Two less billionaires had United Technologies Corporation (NYSE:UTX) in their portfolios at the end of the second quarter compared to the prior one. Similarly, the value of the money held in the stock by the remaining six hedge fund managers decreased to $1.25 billion from $1.57 billion during the June quarter. Earlier this month, the industrial manufacturer reported mixed financial results for the third quarter. United Technologies posted earnings from continuing operations of $1.61 per share, down from $1.93 per share reported a year ago, but above analysts’ expectations of $1.55 per share. Its revenues declined by 5.7% year-over-year to $13.79 billion, missing analysts’ estimates by $770 million. However, the company’s officials asserted that they would reveal substantial restructuring efforts in the fourth quarter. Let’s not forget to mention that the stock has declined by nearly 11% since the end of the June quarter and is 13% in the red year-to-date. Ken Fisher’s Fisher Asset Management reported ownership of 8.18 million shares in United Technologies Corporation (NYSE:UTX) through the current round of 13F filings, for the September 30 reporting period.