3 Surprising Stocks That Billionaires We’re Buying Up for 2018

Investing legends like Warren Buffett, Carl Icahn, and Jim Simons became billionaires through decades of delivering outsized returns for their clients. Among the 663 hedge funds in our database that have filed 13Fs this year, about 60 of those are actively managed or were founded by billionaires.

We pay special attention to these legendary hedge funds, tracking their collective activity in addition to that of the entirety of the hedge funds that we monitor. In doing so, we can identify interesting trends among this group of talented investors, which could signal stocks that are poised for big things.

We found three such stocks when going over the latest hedge fund ownership data, each of which had a notable jump in ownership among billionaire funds during the final quarter of 2017. Those stocks are Caesars Entertainment Corp (NASDAQ:CZR), HD Supply Holdings Inc (NASDAQ:HDS), and Bunge Ltd (NYSE:BG). We’ll look at who was buying these stocks and what may have triggered that in this article.

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HD Supply Holdings Inc (NASDAQ:HDS)

Billionaire Managed or Founded Funds that Opened Positions in HDS: Jim Simons’ Renaissance Technologies (364,800 shares), Glenn Russell Dubin’s Highbridge Capital Management (313,576 shares), Julian Robertson’s Tiger Management (10,000 shares), Michael Platt and William Reeves’ Bluecrest Capital Mgmt. (96,340 shares), Paul Tudor Jones’ Tudor Investment Corp (46,470 shares)

How Much Money Billionaire Funds Have Invested in HDS: $1.34 billion

12 billionaire funds in our database owned shares of HD Supply Holdings Inc (NASDAQ:HDS) at the end of 2017, a jump from just seven three months earlier. Jim Simons’ quant fund opened the largest position, totaling 364,800 shares, while Highbridge Capital Management, which also enjoys a little quant action, bought over 300,000 shares as well.

HD Supply Holdings Inc (NASDAQ:HDS) Asset Sale Would Create Value: SunTrust Robinson Humphrey’s analyst Keith Hughes recently raised his price target on HD Supply to $48 from $42. Hughes asserted that a sum-of-the-parts analysis of the company’s business units showed that it deserves a higher valuation and noted that a spin-off of its construction and industrial unit could also close the valuation gap. HD Supply has explored selling some of its assets in the recent past, with sources saying early last year that private equity firms had shown interest in its Waterworks unit, which HD Supply was considering.

On the next page we’ll look at two other stocks that billionaire funds were scooping up in the final quarter of 2017.

Bunge Ltd (NYSE:BG)

Billionaire Managed or Founded Funds that Opened Positions in BG: Michael Platt and William Reeves’ Bluecrest Capital Mgmt. (24,133 shares), Jorge Paulo Lemann’s 3G Capital (200,000 shares), Farallon Capital, founded by Thomas Steyer (105,000 shares), Louis Bacon’s Moore Global Investments (145,605 shares)

How Much Money Billionaire Funds Have Invested in BG: $625 million

Four billionaire funds added Bunge Ltd (NYSE:BG) to their portfolios in the fourth quarter, lifting the total to 11 overall. Jorge Paulo Lemann’s 3G Capital, which helped facilitate the Heinz/Kraft merger alongside fellow billionaire investment firm Berkshire Hathaway, took the largest stake in the food company among the four, consisting of 200,000 shares.

Merger Talks With Archer Daniels Midland Company (NYSE:ADM) Going Nowhere (But That’s Okay): Bunge shares have gained 7% this year, but have given back most of their gains from the January announcement that Archer Midland Daniels had approached Bunge about a merger, as expectations that a deal would be reached have gradually faded. The deal, which could’ve valued Bunge at as much as $96 per share, has not come to fruition after more than a month of talks, which have reportedly dragged over antitrust issues. Analysts believe that Bunge will be a prized takeover target for other agri-giants should talks officially fall through.

Caesars Entertainment Corp (NASDAQ:CZR)

Billionaire Managed or Founded Funds that Opened Positions in CZR: Paul Singer’s Elliott Management (4.85 million shares), Louis Bacon’s Moore Global Investments (1.88 million shares), Glenn Russell Dubin’s Highbridge Capital Management (521,636 shares), James Dinan’s York Capital Management (1.77 million shares), David Tepper’s Appaloosa Management (5.86 million shares)

How Much Money Billionaire Funds Have Invested in CZR: $1.56 billion

Five billionaire funds opened positions in Caesars Entertainment Corp (NASDAQ:CZR) during the fourth quarter, though two funds also closed positions in the stock. Overall, ten billionaire funds were shareholders of Caesars on December 31. Of particular note is the size of the positions, with the smallest being over 500,000 shares strong. Caesars Entertainment Corp (NASDAQ:CZR) was also a hit among the broader hedge fund industry, as ownership of the stock nearly doubled to 71 of the funds in our database as of December 31 from just 36 as of three months prior.

Caesars Entertainment Corp (NASDAQ:CZR)’s Debtholders Get Paid (in Stock): The surge in hedge fund and billionaire ownership is primarily due to Caesars paying off creditors with stock after its bankruptcy reorganization was completed last October. Appaloosa Management and Elliott Management were among those debtholders, and vocal ones at that, accusing private equity firms TPG and Apollo Global Management of “brazenly looting” Caesar’s most valuable assets following their $31 billion leveraged buyout of the company then known as Harrah’s Entertainment in 2008. Also among those debtholders was billionaire George Soros’ Soros Fund Management, whose position in Caesars grew by over 1,000% during the fourth quarter to 34.5 million shares, lifting it into the top-10 shareholders of the company.

Disclosure: None