Although billionaire hedge fund managers sometimes achieve great returns, following their every move might not have great results. Since these investment firms manage so much money, investing in small-cap stocks is not always an option, forcing them to bet on large-cap companies. Hence, beating the market becomes increasingly difficult as a hedge fund’s equity portfolio grows above the $1 billion mark. Small-cap stocks picked by hedge funds on the other hand, were able to beat the market consistently from 1999 to 2009, achieving double-digit annual rates. Overall, it is always smart to follow billionaire hedge fund managers, especially when small-cap stocks are involved.
Last quarter, billionaires investing in the consumer services industry were particularly bullish regarding Time Warner Cable Inc (NYSE:TWC), Alibaba Group Holding Ltd (NYSE:BABA), Liberty Global plc (NASDAQ: LBTYK), Liberty Interactive Group (NYSE:QVCA), and Time Warner Inc (NYSE:TWX). Although DIRECTV (NASDAQ:DTV) and Family Dollar Stores, Inc. (NYSE:FDO) were also popular stock picks amongst this select group of investors, they are excluded from this article because they are safe merger arbitrage plays.
Time Warner Cable Inc (NYSE:TWC) was one of the most popular consumer services stock picks among billionaire investors last quarter, with 15 billionaires investing $4.39 billion. Chris Hohn is particularly bullish regarding the company, disclosing ownership of 9.87 million shares at the end of the fourth quarter, which are held by his firm Childrens Investment Fund. Furthermore, it was Mr. Hohn’s top bet at the close of the year, accounting for more than 58% of his firm’s equity portfolio. Time Warner Cable Inc (NYSE:TWC) is also backed by billionaire John Paulson, who increased his exposure to the stock by 19% last quarter. His fund, Paulson & Co held a stake of 8.70 million shares, which made it the Time Warner Cable’s second-largest institutional shareholder among the funds we track. Although the stock gained around 13% in 2014, share prices are down slightly year-to-date. Nevertheless, the company’s anticipated merger with Comcast Corporation (NASDAQ:CMCSA), which is set to acquire 100% of Time Warner Cable Inc (NYSE:TWC)‘s outstanding stock once the agreement is approved, could prove quite beneficial, as Time Warner Cable shareholders are set to receive a premium for their shares valued well above current trading rates.
Alibaba Group Holding Ltd (NYSE:BABA) has turned into one of the favorite stocks for billionaires investing in the consumer services industry, with 15 billionaires also investing in it. Last quarter, billionaire Chase Coleman disclosed entering a new position in the company with the purchase of 5.18 million shares, making Alibaba one his top picks. Other billionaires betting on this stock include George Soros, whose investment firm Soros Fund Management held shares of Alibaba Group Holding Ltd (NYSE:BABA) amongst its top picks last quarter and owns 4.4 million shares. Mr. Soros has been involved with the company since its IPO in the third quarter of 2014, maintaining his fund’s holding unaltered. Since the Chinese e-commerce firm went public, share prices dropped by around 8% and are currently trading near the 52-week low of $82.81.
Liberty Global plc (NASDAQ: LBTYK) is also a popular stock pick amongst billionaires as of late, including billionaire Warren Buffett. The legendary investor holds 7.35 million shares of the company’s stock through his holding company Berkshire Hathaway, which was unchanged during the previous quarter. David E. Shaw is another billionaire taking a bullish stance, revealing ownership of 11.14 million shares of the company in his fund’s last 13F filing, which was up slightly from the previous filing.
After acquiring Virgin Media for $24 billion in June of 2013, Liberty Global plc (NASDAQ: LBTYK) became the world’s largest international cable provider.
Billionaires looking for a good investment opportunity in the consumer services industry were often drawn to Liberty Interactive Group (NYSE:QVCA) last quarter, 11 of them in total. Although share prices remained practically stagnant throughout 2014, the stock’s five-year growth trajectory is solid at 153%. Billionaire David E. Shaw increased his fund’s exposure to the stock by 437,500 shares last quarter and now owns a position amounting to 7.81 million shares. Since his fund owns 2.22 million shares, Ken Griffin can also be counted amongst Liberty Interactive’s bullish billionaire investors. The company was also backed by Mario Gabelli, who disclosed a position of just under 2.10 million shares last quarter.
Furthermore, seven different rating firms have issued a “buy” rating for Liberty Interactive Group (NYSE:QVCA), while the stock’s price target issued by brokerages is $35.30. The company, currently trading at $29.31, operates in the video and online commerce industries in North America, Europe, and Asia.
Finally, Time Warner Inc (NYSE:TWX) completes our list of the most popular consumer services stocks amongst billionaires. Among the funds we track, 90 funds held a position in the company last quarter, including 11 billionaires, among them Mario Gabelli. The billionaire’s fund held a stake of 2.68 million shares, after revealing a 3% increase to its position during the fourth quarter. Steve Cohen was also betting on this stock, disclosing ownership of 1.08 million shares, held by his family office Point72 Asset Management. Time Warner Inc (NYSE:TWX) was also popular with Ken Griffin’s Citadel Investment Group, which owned 1.43 million shares.
Disclosure: None
