Which stocks are billionaires investing in these days? Despite mounting concerns on whether the Federal Reserve will raise interest rates in the near future, an update on the iBillionaire Index indicates the wealthiest names on Wall Street are still allocating money to certain sectors and large-cap names.
The iBillionaire Index, which holds 30 equal-weighted stocks based on 13F filings from select billionaires such as Warren Buffett, David Einhorn, and Carl Icahn, reveals Wall Street’s elite were once again most heavily weighted toward healthcare (30%), consumer discretionary (30%), and technology (20%) during the second quarter. Health care only represented 16% at the end of 2014, and has gained popularity at the expense of technology. Billionaires allocated a mere 3% of their holdings toward each consumer staples and industrials.
While Apple remained in the index as usual, other names like Applied Materials and American Airlines were cut. Air Products and Chemicals, a Bill Ackman favorite, was also removed from the index. Microsoft was added to the index and held by Steve Mandel, Thomas Steyer, and Ray Dalio. In the second quarter, the ibillionaires bought 12 million shares of Microsoft. New healthcare names in the index include Abbvie, Baxter International, and Perrigo. Twenty-First Century and DIRECTV were dropped, but Netflix was added.
Since its launch in November 2013, the iBillionaire Index has gained about 14%. Overall, nine new companies were added to the iBillionaire Index for its second-quarter rebalance. All 30 stocks loved by billionaires are listed below, with white dots representing new holdings in the index.
As always, investors need to remember their own risk tolerance levels and financial goals. Tracking billionaires through 13F releases is not without its downside. The filings become public within 45 days of the previous quarter, so the information is obviously a bit outdated. Furthermore, the 13F provides a peek at what billionaires are doing, but doesn’t reveal their hedging and trading strategies.
Nonetheless, if you find yourself chasing stocks simply because news breaks about a billionaire making an investment, an ETF could help keep your emotions under control and your portfolio better diversified. It could also help you avoid a catastrophic loss from investing blindly in any single stock. After all, even billionaires make mistakes.
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