Keeping tabs on what iconic billionaire investors George Soros, Warren Buffett, and Carl Icahn are doing with their money can help you find new money-making ideas. What have Soros, Buffett, and Icahn been buying lately? According to reports, Celgene Corp (NASDAQ:CELG), Apple Inc. (NASDAQ:AAPL), and Bristol-Myers Squibb (NYSE:BMY) are among the stocks they've recently been adding to their portfolios. Since these companies have catalysts that could send shares higher, it might be time to buy them in your portfolio, too.
Soros buys Celgene
George Soros is known for a rapid-fire investment approach, and that means the stocks that get bought by Soros Fund Management might not stick around too long.
Although Soros short-term style means following in his footsteps might not be the best way to build a long-term portfolio, there are reasons why you might want to follow his lead and buy Celgene's shares, and then hold onto them even after Soros sells.
According to quarterly filings with the SEC, Soros Fund Management bought a small stake in Celgene during the fourth quarter, and while the position was tiny relative to Soros money under management, it could still prove to be very profit-friendly.
Celgene is arguably the best in its industry at developing and commercializing billion dollar blockbuster drugs. It markets top-selling medicine used in multiple myeloma, pancreatic cancer, and psoriasis, and in February, it reported data that could eventually lead to it having a best-seller in multiple sclerosis, too.
Specifically, management told investors last month that a pivotal trial for ozanimod, its oral multiple sclerosis drug, was a success. Ozanimod reduced MS relapses more than Avonex, an injection-based therapy that generates $2 billion in annual sales, and importantly, it did so with safety data strong enough to have me thinking it will disrupt this $19 billion per year market.
The oral MS drugs that are currently available generate over $8 billion in annual sales, but there are concerns over their safety. Tecfidera, the top-selling oral MS drug, has been associated with a rare brain disease, and Gilenya, the second-best selling oral MS drug, can cause a worrisome drop in heart rate. If ozanimod notches FDA approval, then I think it could win away considerable market share from those two drugs.
Ozanimod could also be a blockbuster because of ongoing trials that may expand its use into ulcerative colitics and Crohn's disease.
Because Celgene thinks its revenue will surge from about $11 billion this year to $21 billion in 2020, and its earnings per share will more than double to at least $13 during the period, there appears to be no shortage of growth on the horizon. Since it boast one of the industry's best balance sheets, it has a proven track record of successfully marketing new drugs, and it has ozanimod in the wings, I think there's plenty of reason why this Soros buy can be added to every day investor portfolios.
Warren Buffett takes a big bite of Apple
Warren Buffett still uses a flip phone to make calls, but that didn't stop him from making consumer device giant Apple one of his biggest stock holdings.
Apple showed up in Berkshire Hathaway's portfolio early last year, and since then it's become his second largest position. Berkshire Hathaway's quarterly 13F report with the SEC shows he owned 57 million shares of Apple in December, but recently Buffett told CNBC that his Apple stake has climbed to more than 130 million shares.
Buffett's interest in Apple could be driven by optimism that consumers who had previously held off on upgrading their iPhone's are finally doing so. Last quarter, Apple reported that iPhone revenue began to climb again, reaching a record. He may also be attracted to the company's huge user base, which provides plenty of profit-friendly growth opportunities for Apple's services, including iTunes. Furthermore, he may be drawn to Apple's massive cash flow. Last year, $27 billion in cash flow helped it increase its cash and investments stockpile to a breath-taking $245 billion.
Clearly, there's a lot to like about Apple right now. If the company can keep its foot on the innovation pedal, it should maintain the financial flexibility necessary to return increasingly more money to investors via its dividend. At current share prices, the company's dividend yield is 1.6%, but that dividend rate could grow if Apple increases its dividend payout. The company last increased its dividend by 10% in 2016, so another dividend increase could be in the works soon.
Icahn targets Bristol-Myers Squibb
In February, The Wall Street Journal reported that iconic activist investor Carl Icahn is cozying up to biopharma giant Bristol-Myers Squibb. Icahn is quiet about his intentions, but his track record suggests profit-friendly changes could be coming at the drugmaker. In the past, Icahn's used his sway to shake-up C-suites, win seats on boards, arm-wrestle spin-offs, and convince companies to sell themselves outright.
Who knows what his strategy is for Bristol-Myers Squibb, but the company's got a lot going on that makes it an intriguing target for Icahn (and potentially, you).
Its best-selling drug is Opdivo, an immunotherapy that makes it more difficult for cancer cells to avoid detection by the immune system. Opdivo's won FDA approval in a few cancer indications, but it's widely used in battling advanced lung cancer and melanoma. The drug's ability to combat those cancers has made it a blockbuster seller, with annualized sales of $5.2 billion exiting the fourth quarter.
While Opdivo unquestionably remains a top-selling medicine, Bristol-Myers Squibb's shares tumbled last year when a trial designed to further increase Opdivo's use in lung cancer fell short, and a competitors trial succeeded. The news was disappointing, but it's arguably turned Bristol-Myers Squibb's shares into a bargain bin buy.
Bristol-Myers has dozens of ongoing trials that could expand Opdivo's use, including additional trials in lung cancer that could make last year's failure a moot point. Furthermore, Opdivo isn't its only fast-growing drug. It also co-markets the top-selling anticoagulant Eliquis with Pfizer. Last year, Eliquis sales jumped 80% to $3.3 billion.
Because Bristol-Myers Squibb is forecasting sales growth again this year, but it's lost $30 billion in market cap since last fall, it's valuation has become much more attractive. Its trailing 12-month price to earnings ratio, for example, has fallen from above 30 to about 21. The sell-off in its shares has also resulted in its dividend yield growing from less than 2% last year to nearly 2.7% now.
Admittedly, only Icahn can tell us what his plans are to rekindle Bristol-Myers Squibb's share price, but with big-time drugs already on the market, and a far more reasonable share price than a year ago, this stock might be worth investing in.
Todd Campbell owns shares of Apple and Celgene. His clients may have positions in the companies mentioned. The Motley Fool owns shares of and recommends Apple and Celgene. The Motley Fool has the following options: long January 2018 $90 calls on Apple and short January 2018 $95 calls on Apple. The Motley Fool has a disclosure policy.