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.
The moral of the story, Fools? Do your own due diligence.
Contrary to popular opinion
In the meantime, let's look once again at famed growth-at-a-reasonable-price investor Steve Mandel, the founder of Lone Pine Capital, who we last checked in with back in July.
- Company: Lone Pine Capital
- No. of Stocks Owned: 60
- Top 5 Holdings: Apple, YUM! Brands, Cognizant Technologies, Crown Castle International, JPMorgan Chase
- Top Sectors: consumer services, technology, financials, industrials
Like a number of the investing legends we've studied, Mandel has a fairly diversified portfolio. But it's notable that while he's investing in the financial sector like many of his counterparts, he's also placing his bets with the consumer. Let's look closer at a few of his choices below:
|
Stock
|
Average Price
|
Current Price
|
% Change
|
CAPS Rating (out of 5)
|
| NetApp (Nasdaq: NTAP ) |
$43.01
|
$51.46
|
19.6%
|
**
|
| Charles Schwab (NYSE: SCHW ) |
$14.28
|
$15.08
|
5.6%
|
****
|
| Colgate-Palmolive (NYSE: CL ) |
$78.29
|
$78.53
|
0.1%
|
****
|
Source: GuruFocus and Motley Fool CAPS.
The penalty for peeking
Investors are always trying to get an edge. When a Bloomberg reporter was able to access NetApp's earnings an hour before they were officially released, the market moved the stock down, since it appeared that results at the network storage specialist weren't too good.
Yet trading on incomplete information is never a good idea, and when NetApp's full results came out, it was quickly apparent that business was a lot healthier than the sneak peek suggested. Those "weak" earnings actually owed more to higher share counts than slack business. Revenue jumped to $1.2 billion, and net income rose 56% year over year. That growth easily bested what Hewlett-Packard (NYSE: HPQ ) and EMC (NYSE: EMC ) cobbled together.
This broker's not broke
Earnings-release faux pas such as Disney's and NetApp's aren't the only catalysts driving volumes higher (though they don't hurt). Even without an earnings "oops," Charles Schwab reported that September daily average trades from clients climbed 7%, while Interactive Brokers (Nasdaq: IBKR ) and TradeStation also reported increases of 6% and 4%, respectively. Apparently, investors have an appetite for trading again.
Though its brokerage may be the headline, CAPS member tekennedy believes that Schwab's banking business will benefit most:
Overall growth should be led by their banking operations however, as penetration among clients has room to grow. Banking growth has been underappreciated; assets averaged $12 billion in 2007 and were over $38 billion by end of year 2009 and continue to grow. In the short term this has been largely overshadowed due to the current low rate environment. Considering growth prospects this company should easily outperform the market as a whole.
Bigger smiles ahead for Colgate
Although consumer-goods companies Colgate-Palmolive, Clorox (NYSE: CLX ) , and Kimberly Clark failed to put a smile on investors' faces after their recent earnings report, Mandel isn't the only investing master who believes that the toothpaste maker will eventually brighten his portfolio. The company was also one of the top holdings at John Hussman's Hussman Econometrics Advisors.
Stagnant revenue brought on by pricing pressure has held back many consumer-product makers, but Colgate, with a widening lead in the toothpaste market and a broad presence in Latin America, is looking to expand its industry-leading positioning.
CAPS member tobgj certainly thinks Colgate's portfolio of global brands gives it stability. So does tekennedy, who also weighed in:
Strong ROE with ability to grow the business, especially in emerging markets. Strong and relatively diverse product line helps reduce risk and foreign earnings helps shed my exposure to US dollar. Valuation seems fair relative to growth prospects and S&P and earnings growth dividend should grow faster than S&P.
Keep an eye on Colgate's ascent by adding it into Fool.com's free portfolio tracker, and let good fortune smile on you by adding your thoughts on the Colgate-Palmolive CAPS page as well.
Join the ranks of the legendary
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.
RSS Headlines
Fool UK