Runaway inflation and rising interest rates are making bears out of investors and keeping stock markets under pressure this year. Despite sliding stock prices across the board, some billionaire money managers kept confidently buying as the market plunged in the second quarter of this year.
Blindly following successful investors isn't advisable, but there's nothing wrong with riding on their coattails. Here's what you should know about three stocks that billionaire hedge-fund managers were buying while the overall stock market was tanking.
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1. Dexcom
Steven Cohen and Point72 Asset Management bought over 900,000 shares of Dexcom (DXCM 0.91%) during the second quarter. The medical-device stock has risen around 18.6% since the end of June and could climb even higher.
Dexcom markets continuous glucose-monitoring (CGM) devices that are increasingly popular among diabetic patients. An estimated 37 million Americans have diabetes, and providing them with CGMs that they regularly replace could lead to an earnings windfall.
Dexcom's new lead product, the G7, is racking up sales in Europe, where regulators have already granted clearance. In the U.S., the Food and Drug Administration (FDA) is expected to clear the G7 late this year because some last-minute software changes delayed the application process.
With the G7 launch underway in Europe, second-quarter international sales surged 39% year over year. Launching the much-anticipated G7 in the U.S. could make 2023 a very memorable year for Dexcom and its stock price.
2. Salesforce
David Tepper and Appaloosa Management opened a new position in Salesforce (CRM -0.74%) during the second quarter. The customer relationship-management (CRM) stock now makes up more than 2% of Appaloosa's portfolio.
Salesforce operates the world's most popular cloud-based customer relationship-management (CRM) solution, and its competitors aren't even close. In the latest software-tracker survey from industry analyst IDC, Salesforce's23.8% share of the worldwide CRM market was larger than its top four competitors combined.
Salesforce shares rallied this summer, only to fall hard in August along with most of the stock market. Now you can scoop up the stock at just 33.1 times forward-looking earnings estimates. That's a low price to pay for a company that expects total revenue to climb 17% this year.
3. Walt Disney
In the second quarter, Daniel Loeb and Third Point Capital opened a new position in Walt Disney (DIS 0.07%). The value-driven fund confidently bought 1 million shares of the media giant.
Shares of Disney have risen around 19% since the end of June, but the stock trades at around 29.1 times forward-earnings expectations. With its amusement parks full of tourists again and subscription services that keep outperforming expectations, Disney was able to report second-quarter revenue that soared 23% year over year.
There were concerns that Netflix's subscriber-count backslide would extend to Disney's streaming operation. Now it looks like Disney is at least partly responsible for its competitor's lack of growth. Disney+ added 7.9 million subscribers in the second quarter, which raised total streaming subscriptions to 205 million.
Disney has a strong chance to become the global streaming-service leader. It also has a collection of profitable theme parks and some of the most recognizable entertainment brands on the planet. Put it all together, and the stock looks like a buy now, despite a lofty valuation.
