Can you earn money by mimicking the activity of large investors? Tracking hedge funds might not get you rich fast, but it might give you an edge to beat the market and earn some solid returns. At Insider Monkey we track over 700 funds with hundreds of millions of dollars in assets under management, which employ a scrupulous approach to researching companies and picking those that are most likely to offer big returns. Moreover, when a fund plans to invest a significant amount of cash in a company, its manager can go to the management of the company and have a face-to-face discussion, which publicly discloses further information about the company, it’s management’s performance, and its operations. However, since funds have such large amounts of money they have to invest, they can obtain lower returns in exchange for a lower risk and still satisfy their investors with profits. That’s why we follow the activity of all the funds that we track and identify the most popular stocks among them. A particular case is billionaire investors, who managed to earn their impressive wealth by meticulously picking winners in the US equity markets or picking undervalued stocks and then pushing for changes that maximize shareholder value.
In this article we will focus on billionaire investors and five stocks from the consumer defensive sector that have been the most popular among them. Consumer defensive stocks are non-cyclical and are always in demand, no matter how the market is going, that’s why the sector was able to provide average returns of around 16% over the last year. Warren Buffett has invested around 25% of his equity portfolio in these stocks, with Coca-Cola being one of his largest holdings for decades. The last round of 13F filings showed that The Coca-Cola Co (NYSE:KO), together with Mondelez International Inc (NASDAQ:MDLZ), Tyson Foods, Inc. (NYSE:TSN), Lorillard Inc. (NYSE:LO) and Coca-Cola Enterprises Inc (NYSE:CCE) have been some of the favorite stocks of billionaires. Let’s take them one by one.
In first place stands Mondelez International Inc (NASDAQ:MDLZ), in which 12 funds led by billionaires held long positions. Among them are billionaires Nelson Peltz and Mason Hawkins, who held 46.30 million shares and 26.74 million shares at the end of the last quarter respectively. In the equity portfolios of both investors, Mondelez International Inc (NASDAQ:MDLZ) represented one of the largest stakes, accounting for over 17% of Peltz’s Trian Partners’ portfolio, and 5% of Hawkins’ Southeastern Asset Management’s equity portfolio. Mondelez’s stock returned around 10% over the last year, underperforming the sector’s average of 14%. On the other hand, among all funds that we track, 63 investors reported holding shares of Mondelez in the last round of 13F filings, versus 69 funds in the previous quarter.
Even though Mondelez International Inc (NASDAQ:MDLZ) reported earnings above the estimates in its latest financial report, the company is struggling from the volatility in currencies and the stronger US dollar, as 80% of its revenues are from international markets, as well as from competitive pressure and weaknesses in some categories of food products it manufactures.
Tyson Foods, Inc. (NYSE:TSN) was another consumer defensive stock on billionaires’ radars, one in which 12 billionaires reported stakes, the same number as in Mondelez. However, the overview of our whole data shows that the number of funds holding long positions went up to 54 from 52 during the fourth quarter. Stakes in the poultry and meat producer have been disclosed by billionaires Ken Griffin of Citadel Advisors and Steven Cohen of Point72 Asset Management, among others. However, both Griffin and Cohen cut their exposure to Tyson Foods, Inc. (NYSE:TSN) during the fourth quarter, to 5.56 million shares and 5.18 million shares respectively. Other billionaires betting on Tyson Foods, Inc. (NYSE:TSN) include Israel Englander, David E. Shaw, and Glenn Russell Dubin.