In case you missed it, one of the most important data releases of the quarter occurred last month -- and I'm not talking about the Federal Open Market Committee meeting that led to interest rates being increased. Rather, it was the Feb. 14 deadline for institutional investors to file Form 13F with the Securities and Exchange Commission.
In plain English, a 13F is a portfolio snapshot that allows investors to see what stocks the brightest and most successful money managers on Wall Street bought and sold in the most recent quarter (in this instance, the fourth quarter). It's a required quarterly filing for firms with at least $100 million in assets under management.
Image source: Getty Images.
With the stock market exceptionally volatile throughout 2022, 13Fs have been useful in helping investors figure out where top-tier money managers are putting their money to work. In particular, billionaire investors have gravitated to Dow Jones Industrial Average (^DJI 0.67%) stocks. The 30 companies that comprise the Dow Jones are usually profitable, time-tested, and multinational. In other words, most of them are well suited to navigate a possible U.S. economic downturn.
Based on the latest round of 13Fs, billionaire money managers simply can't stop buying the following three Dow stocks.
Walt Disney
The first Dow Jones Industrial Average stock billionaires bought hand over fist during the fourth quarter is the famed "House of Mouse," Walt Disney (DIS -0.55%). Billionaires Nelson Peltz of Trian Fund Management and Ken Griffin of Citadel Advisors were aggressive buyers. Peltz and Griffin oversaw the purchase of nearly 9.03 million shares and 2.5 million shares, respectively, of Walt Disney stock.
If there's a top reason to buy shares of Walt Disney, it's the company's irreplaceability. While there are other movie studios and theme parks, none have the characters, stories, or branding that Disney can offer. This is one of the very few companies that has absolutely no issue crossing generational gaps and connecting with consumers.
To add to the above, Walt Disney's irreplaceability comes with exceptional pricing power. On top of recently increasing the monthly price for its ad-free and ad-supported streaming services, the price of an admission ticket to Disney's theme parks has vastly outpaced the U.S. rate of inflation. Since Disneyland opened in Southern California in 1955, ticket prices have jumped 10,300% ($1 to $104). By comparison, the U.S. inflation rate is up closer to 1,000% over the same period. This is more confirmation that consumers will pay up to have their imaginations intrigued by Walt Disney.
Billionaire money managers might also be excited about the prospect of Disney's streaming services eventually becoming profitable. Although Disney's price hikes did cause the number of Disney+ subscribers to decline ever so slightly in the fiscal first quarter -- 164.2 million to 161.8 million over three months -- the loyalty of most Disney consumers, coupled with prudent spending on Disney's part, should have this streaming segment pushing into the profit column in 18 to 24 months.
As one final note, Walt Disney should benefit from China abandoning its zero-COVID strategy in December. Though the next couple of quarters could be a bit bumpy as China contends with COVID-19 infections, an open China can be a big-time positive for Disney's theme park operations.
Salesforce
The second Dow Jones stock that's clearly piqued the interest of billionaire fund managers is cloud-based customer relationship management (CRM) software solutions provider Salesforce (CRM 1.27%). CRM software is used by consumer-facing businesses to enhance existing customer relationships and improve sales.
The fourth quarter saw billionaires Steven Cohen of Point72 Asset Management, Israel Englander of Millennium Management, Ken Fisher of Fisher Asset Management, and John Overdeck and David Siegel of Two Sigma Investments all buy Salesforce stock. As listed, these billionaires respectively oversaw the addition of approximately 3.35 million shares, 2.59 million shares, 1.15 million shares, and 1.01 million shares.
Salesforce stock getting halved since its all-time high is the probable reason billionaires piled in during the fourth quarter. Despite short-term worries that enterprise demand for CRM software solutions could taper a bit if a U.S. recession arises, there are a couple of reasons to believe this company is positioned for long-term, double-digit growth.
To start with, Salesforce is the dominant player in the CRM space. IDC ranked it the top global CRM applications provider for the ninth consecutive year in 2021. What's even more impressive is that Salesforce's share of the CRM space has been growing annually for more than a half-decade. The 23.8% share it held in 2021 was more than its four closest competitors on a combined basis. In other words, Salesforce is the No. 1 player in a trend that offers sustained low-double-digit growth.
The company's steady growth is also due to CEO Marc Benioff making a number of bolt-on acquisitions throughout the years. These purchases, which include MuleSoft, Tableau Software, and Slack Technologies, have helped expand the Salesforce ecosystem and provide cross-selling opportunities.
According to Benioff, Salesforce is aiming for $50 billion in annual sales by fiscal 2026 (roughly calendar year 2025). If Salesforce can hit this lofty target, these billionaire investors should be sitting pretty.
Image source: Coca-Cola.
Coca-Cola
The third Dow stock billionaire money managers haven't been able to stop buying is beverage behemoth Coca-Cola (KO 0.63%). The fourth quarter saw billionaires Ken Griffin of Citadel and Steven Cohen of Point 72 respectively buy almost 3.68 million shares and nearly 1.77 million shares of Coke stock.
If you're wondering what's bubbling with Coca-Cola that would entice two successful billionaires to aggressively buy in, the answer probably has to do with the uncertainty surrounding the stock market. This is an extremely low-volatility stock that generates relatively consistent sales, profits, and operating cash flow year in and year out. In short, these billionaires might view Coca-Cola as something of a safe-haven investment during a period of turmoil for the stock market.
Similar to Walt Disney, Coca-Cola offers exceptional brand awareness and incredible pricing power. North Korea, Cuba, and Russia (the latter being due to its invasion of Ukraine) are the only three countries where Coke doesn't currently have any operations. This top-tier brand awareness allows the company to generate consistent cash flow in developed markets, where it holds a 14% share of all commercial beverages, while lifting its organic growth rate by further penetrating emerging/developed markets.
Coca-Cola also connects with consumers of all ages. The reason its brand and logo are so well known is because its marketing messages are on point. It utilizes social media and popular brand ambassadors to reach younger audiences, while relying on its holiday connections to Santa Claus as a means to connect with more mature audiences.
Additionally, Coca-Cola is a true Dividend King. Last month, it increased its base annual payout for a 61st consecutive year. Only a small number of publicly traded companies sport a longer active streak.
