Scraping together enough coin to win the annual luncheon auction with Warren Buffett is probably beyond most investors' means. With the proceeds going to charity, this year's winning bidder forked over $2.63 million for the privilege.
Feast or famine
While we likely can't afford to break bread with the greats, we can peek at their stock ideas through their SEC filings. Here, we'll pore over some of the top investors' reports to see which stocks they've chosen as their best investments. We'll then check in with Motley Fool CAPS members to learn whether they agree.
First, a few caveats ...
- There's a delay between when the stocks were bought and when these investors filed their paperwork, so they might have sold out since.
- These legends may be hot investors now, but that can change in an instant. Bill Miller was a wunderkind after beating the market 15 years in a row. Then he went cold for three. He came back in 2009, but we don't know what 2010 will bring.
Contrary to popular opinion
Fools should definitely do their own further research here. But in the meantime, let's take a look at John Hussman of Hussman Econometrics Advisors, whose Hussman Strategic Growth Fund avoided much of the market's mess by taking long and short positions in stocks. When we last looked at Watsa's portfolio he was focusing on financials, information technology, and health care. Let' see if he's changed directions.
Fund: Hussman Econometrics Advisors
No. of Stocks Owned: 157
Top 5 Holdings: AstraZeneca, Life Technologies, Colgate Palmolive, Amazon.com, Aeropostale
Top Sectors: Health Care, Consumer Services, Technology, Consumer Goods
Although a lot has remained the same at Fairfax, there's plenty of change, so let's look closer at a few of his most recent choices below.
|
Stock
|
Average Price
|
Current Price
|
% Change
|
CAPS Rating (out of 5)
|
|
CVS Caremark (NYSE: CVS )
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$34.64
|
$28.31
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22.4%
|
****
|
|
Gilead Sciences (Nasdaq: GILD )
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$38.89
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$33.15
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(14.8%)
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*****
|
|
Home Depot (NYSE: HD )
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$33.53
|
$29.41
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14%
|
***
|
Source: GuruFocus and Motley Fool CAPS.
Price is what you pay
As much as Hussman has seemingly been trying to rival Nouriel Roubini as the leading advocate of doom and gloom -- for instance, he says all that cash that companies are supposedly sitting on is only there because of an incredible issuance of debt that will come to haunt them soon enough -- he's obviously found a number of companies he believes worthy of an investment, such as the value he's found in health-care stocks. Along with CVS Caremark, he's also made some big bets on Merck (NYSE: MRK ) and Abbott Labs (NYSE: ABT ) .
That quite a number of them are also focused on the consumer perhaps suggests he's betting the economy won't fall as staggeringly far as some predict. Or maybe they're just hedges for his shorts.
The pending home sales numbers that came out the other day has given hope that the housing industry may have finally hit bottom. The index of unclosed contracts to buy a home increased from 75.5 to 79.4 a turnaround from two prior months that showed demand had been in freefall. While a turnaround would obviously be good for builders, Home Depot and Lowe's (NYSE: LOW ) would obviously also benefit. Of course, while the uptick is good, when you view where the index sits, you see it's still mired in the muck.
Gilead going viral
It may be that Hussman agrees with CAPS member Prodders who thinks that biotech Gilead Sciences is simply priced too low considering the portfolio of HIV drugs it has:
Way too cheap for a company that still has growth. Will literally earn their mkt cap in cash within 7-8 years. Best HIV drugs and still improving those.
While there is a potential threat from generics for Hepsera, that is becoming a declining property of Gilead anyway as it launched Viread as a successor drug. Analysts think the whole HIV franchise showed some disappointing results recently, but with Atripla launching in Europe, that could be a new growth phase for it.
Concerns about its pipeline are valid, particularly in the face of patent expiration down the road, and the stiff competition in the hepatitis B arena from Merck and Novartis (NYSE: NVS ) , but there's a long road to travel between then and now, which helps explain why 97% of CAPS members rating Gilead expect market-beating performance is still to come.
Value is what you get
Become an investing legend yourself by starting your own research on these stocks on Motley Fool CAPS. Read a company's financial reports, scrutinize key data and charts, and examine the comments your fellow investors have made, all from a stock's CAPS page.
Sign up today for the completely free service, and tell us whether these stocks are as good a value as these investing legends think they are.
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