If you've been investing for any amount of time, you already realize that things can get complicated. Luckily, you don't have to sift through an overwhelming flood of information regarding every investment opportunity.
Every three months the U.S. Securities and Exchange Commission requires all money managers with at least $100 million in assets to disclose their trading activity. We don't have up-to-the-minute details, but we can tell that billionaire investors were all over these three growth stocks during the three months that ended Sept. 30.
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Billionaire hedge fund managers will be the first to tell you that blindly following their biggest trades can be extremely risky. Let's take a closer look at the stocks billionaires have been buying left and right to see if they deserve a place in your portfolio, too.
IonQ
Quantum computing promises to accelerate processing speeds by an order of magnitude, but the refrigerated casings that house most of today's qubit processing units (QPU) are too big to become viable commercial products. IonQ's (IONQ 9.66%) unique "trapped ion" architecture allows it to create relatively tiny QPUs that are only a couple of inches wide.
IonQ is the first quantum computing company to partner with all three major cloud service providers, Amazon Web Services, Microsoft Azure, and Alphabet's Google Cloud. In addition to partnerships with the big three cloud providers, Softbank Group is an investor that wants to foster demand for IonQ's quantum computing power by exposing it to the tech businesses in its portfolio.
A strong toehold in the nascent quantum computing industry convinced billionaire hedge fund managers to buy the stock with both hands during the third quarter. James Simons of Renaissance Technologies bought over 1.2 million shares and Israel Englander of Millennium Management bought more than 800,000 shares.
Individual investors who were late to the party can probably get a better price than the billionaires who recently bought up millions of shares. The stock has fallen about 37% from the peak it reached in September. That said, investors should understand it's still extremely risky.
Third-quarter revenue more than doubled year over year to reach $6.1 million but that isn't nearly enough to make ends meet. The company lost $115 million in the first nine months of 2023 and there's no telling when it will stop losing money. Rapid adoption of quantum computing could make this stock a top performer over the long run, but it's only appropriate for investors with a sky-high tolerance for risk.
SoFi Technologies
Billionaire hedge fund managers have been scooping up SoFi Technology (SOFI 3.69%) stock with both hands. During the three months ended Sept. 30, John Overdeck and David Siegel of Two Sigma Investments bought over 5.6 million shares. Jeff Yass and Susquehanna International Group bought about 2.8 million shares.
Individual investors can probably get in at better prices than SoFi's billionaire investors. The stock has fallen about 24% from a peak it reached in September.
SoFi started as the first bank to refinance student loans, but now its member-based operation aims to be a one-stop shop for consumer financial needs. Its credit cards, personal loans, and checking accounts keep drawing in new members by the bucketload. The company reported 1.05 million new products in the third quarter, raising the total to 10.4 million at the end of September.
SoFi reported a $267 million loss in the third quarter, but there was a $247 goodwill impairment during the period. If we ignore the one-time non-cash charge, SoFi's third-quarter net loss narrowed to $19.5 million, or just $0.03 per share. With this in mind, management is confident about achieving profitability according to generally accepted accounting principles (GAAP) in the fourth quarter.
Shares of SoFi currently trade for 2.1 times the bank's tangible book value. That's heaps more than you'd pay for larger established banks, but they aren't growing their membership rosters by more than 40% annually. Buying some shares of this stock now to hold for the long run looks like a wise move for most growth-oriented investors.
