How to pick stocks like Warren Buffett if you are not Warren Buffett?
One way is to look up what assets famed investors choose for their portfolios. Not only do they have enormous experience and a track record of success, but also insights and analysis mechanisms that mere mortals can’t access.
We picked 5 stocks that at least one billionaire (or hedge fund, or advisory) has in their portfolio.
Which ones would you choose?
Amazon.com, Inc. (AMZN)
Who invested: John C. Bogle’s Vanguard Group, Larry Fink’s BlackRock, Warren Buffett’s Berkshire Hathaway, Advisor Group
Why invest: dominance in the e-commerce landscape and the fact that the pandemic caused the consumer reluctance to expose themselves to risk at offline stores.
The largest e-commerce company’s shares can be found in almost every successful trader’s portfolio — especially now when the pandemic challenges the traditional way of buying and selling things.
In 2019, even Warren Buffett’s Berkshire Hathaway started buying Amazon shares, although Warren Buffett and his team had never invested in them before.
I’ve been a fan, and I’ve been an idiot for not buying.
Warren Buffett
Wondering what the other stocks in Warren Buffett’s portfolio are?
Here are the reasons why traders like to invest in Amazon shares:
- Amazing financial performance even during the darkest times;
- Presence in many different sectors (books, music, electronics, cloud services, groceries, AI, video streaming, food delivery, and many more);
- The company continually engages in new acquisitions and partnerships;
- Strong e-commerce and market dominance;
- Rapid expansion to emerging markets.
As of early 2021, many IQ Option traders prefer to buy Amazon shares.
Activision Blizzard (ATVI)
Who invested: George Soros, John C. Bogle’s Vanguard Group, Larry Fink’s BlackRock
Why invest: high earnings in 2020/21, strong brand name, top games in the portfolio
Activision Blizzard is one of the world’s leading video game publishers. It owns Call of Duty, World of Warcraft, Doom, Quake, Civilization, Hearthstone, and other globally popular series.
Before 2016, the company was mainly focused on the PC and console markets, but the scenery changed when Activision acquired King Digital. King owned Candy Crush, the most popular mobile game in the US, which let Activision in the smartphone games market.
In 2020, the superstar investor George Soros bought $45 million worth of shares in Activision Blizzard. Analyst Michael Pachter wrote an investment note saying that the future is bright for Activision:
We see great potential for the company’s release pipeline over the next three years… we expect tech giants Amazon and Google to compete aggressively with Sony and Microsoft to roll out cloud-based game streaming initiatives; this could have the double-edged benefit of expanding the market for games dramatically and of increasing competition for titles, which should benefit Activision’s margins over the medium term.
Patcher’s opinion seems to be shared with 93% of IQ Option traders investing in Activision Blizzard in 2021.
Invesco QQQ Trust (QQQ)
Who invested: Soros Fund Management, John C. Bogle’s Vanguard Group, Trian Fund Management, Larry Fink’s BlackRock, Dimensional Fund Advisors, Morgan Stanley
Why invest: The index’s performance is heavily reliant on the performance of tech stocks, which perform handsomely in the post-pandemic world.
Investco is an exchange-traded fund (ETF). It is a kind of bet on the continuation of tech companies’ growth trend. Simply put, QQQ is a way to invest in top tech brands in bulk instead of choosing only Apple, or Microsoft, or Facebook, etc. The index includes Apple, Microsoft, Amazon, Facebook, Alphabet, Tesla, NVIDIA, Netflix, PayPal, and other shares.
Since QQQ is not a single stock but a set of stocks moving individually, its movement is harder to predict. However, many successful investors still prefer Invesco over simply Apple or Amazon shares. For example, George Soros invested almost $313 million in Invesco QQQ Trust in 2020 — now, QQQ represents the second-largest holding of Soros Fund Management.
The truth is, although everyone knows that tech is a golden market for every trader, nobody really knows which companies would perform better. Not even George Soros.
Here’s what IQ Option traders’ sentiment for Invesco looks like in 2021:
Coca-Cola (KO)
Who invested: Warren Buffett’s Berkshire Hathaway, Ray Dalio’s Bridgewater Associates, Larry Fink’s BlackRock, John C. Bogle’s Vanguard Group, Walter L. Morgan’s Wellington Management
Why invest: strategic acquisitions, presence on the emerging markets, variety of products, high earnings in 2020, high dividend yield, re-franchising actions for bottling operations.
The beverage empire is over 100 years now, and it is one of a few companies that has made it that far. Why? Because history proves that people will always drink Coca-Cola. This opinion was shared by Warren Buffett, Ray Dalio, John C. Bogle, and many other investors of the past and present.
This is what helps the company keep high rankings:
- Strategic acquisitions — Coca-Cola owns Monster (energy drinks), Suja (fresh juices), Costa (coffee), and China Green Culiangwang Beverages Holding (plant-based drinks);
- Presence in the emerging markets, including India, Africa, and Asian countries;
- Wide variety of products;
- High earnings in 2020;
- High dividend yield;
- Re-franchising actions for bottling operations are expected to increase profitability and reduce capital spending in the long-term.
Despite the weaker stock performance over the past year, the company’s actions to optimize production are encouraging to investors:
Pfizer (PFE)
Who invested: John C. Bogle’s Vanguard Group, Larry Fink’s BlackRock, Wellington Management, Morgan Stanley
Why invest: Covid-19 vaccine, a wide range of products, durable vaccine sales, large research and development budgets, mergers & acquisitions
In 2020, even the healthiest people heard about this American pharmaceutical company thanks to its development of the Covid-19 vaccine. Aside from this, the company produces medicines in sectors such as oncology, inflammation and immunology, rare diseases, and internal medicine.
The market’s reaction to the company’s latest earnings release wasn’t great. Still, if you read past the headlines, you’ll see that Pfizer can be a jewel of an investment portfolio. Here’s why:
- As of February 2021, Pfizer worked on 95 discovery projects on different stages of clinical trials;
- Pfizer is about to buy a 25% stake in Allogene Therapeutics to accelerate the development of CAR T cell therapies sourced from donors for cancer treatment;
- High dividend yield;
- The medical community expects that people may have to take COVID-19 vaccines every year (like flu shots). This increases the long-term valuation of the coronavirus vaccine market;
- Pfizer is active in licensing deals, cooperative agreements, mergers, and acquisitions. This is highly likely to boost the company’s revenues and profitability in the future.
Here’s how the IQ Option community views the situation right now:
*Warning: these stocks’ past performance is not an indication of future success.
