U.S. stock markets were in turmoil in 2022. A perfect storm of rampant inflation, global supply chain kinks, rising interest rates, geopolitical unrest, a wave of profit-taking following a strong 2021, and the ongoing effects of COVID-19 pushed every major U.S. stock index into bear territory last year.
This unfavorable economic climate didn't stop some of the world's best investors from bargain hunting in the fourth quarter of 2022. Here is a brief look at three top stocks billionaires loaded up on in Q4.
Image Source: The Motley Fool.
Berkshire Hathaway added to its stake in this media giant
Warren Buffett's Berkshire Hathaway (BRK.A -0.50%) (BRK.B -0.44%) bought 2.4 million more shares of the entertainment and media company Paramount Global (PARA -1.02%) in Q4. This amount represents a 2% increase over Berkshire's holdings in Paramount relative to the prior three-month period. Berkshire first initiated a position in the global entertainment giant in the first quarter of 2022, according to the diversified holding company's 13F filings with the U.S. Securities and Exchange Commission.
What's the investing thesis behind Paramount Global? The threat of a recession in the U.S. and declining ad revenue turned out to be major headwinds for the entertainment and media giant last year. As a result of these key overhangs, Paramount's shares fell by a whopping 44% in 2022. Wall Street analysts, however, think this stock is a table-pounding buy following this profound sell-off. Morningstar analyst Neil Macker, CFA, for instance, placed a fair value estimate (FVE) on Paramount's shares of $45 last November. This FVE estimate implies an upside potential of 100% from current levels.
Bridewater Associates piled into this top U.S. bank
Global macro investor and billionaire Raymond Dalio founded the Westport, Connecticut–based hedge fund Bridgewater Associates. In Q4 of 2022, Bridgewater Associates ramped up its stake in Bank of America (BAC 0.13%) stock by a noteworthy 152%. The hedge fund has been a Bank of America shareholder since the fourth quarter of 2020, per the company's 13F filings. After his latest purchase, Bank of America is the fund's 30th-largest holding, as of the fourth quarter of 2022.
What's attractive about this top U.S. bank? Like most U.S. equities, Bank of America had a tough time in 2022. The financial services stock lost a staggering 25.5% of its value last year. Investors moved to the sidelines on this bank stock primarily over fears about an upcoming recession. A recession could lead to lower earnings and top-line growth for Bank of America in the near term due to rising loan default rates.
This headwind, however, might be overblown. While a mild recession in the U.S. is certainly possible, the consensus among economists is that any slowdown will be relatively brief. So, with a top retail branch network, a top-four U.S. credit card business, and a strong commercial banking segment, Bank of America stock is probably undervalued relative to its long term prospects right now.
George Soros hit on this rare disease stock in Q4
Billionaire investor George Soros had a fairly active Q4. His namesake fund, Soros Management Fund, scooped up 2.8 million shares of the rare disease specialist Horizon Therapeutics (HZNP) in the fourth quarter of 2022.
During the fourth quarter, Horizon was repeatedly rumored to be a top buyout target. On Dec. 13, this rumor became reality when Amgen (AMGN 0.60%) paid a whopping $27.8 billion for the drugmaker.
Amgen's Horizon acquisition was the largest deal in the pharmaceutical industry in 2022 by a wide margin. What's more, the biotech heavyweight paid a whopping 48% premium to acquire Horizon, relative to the drugmaker's mid-November share price.
