If you're curious about what the world's most successful investors are buying and selling, you're not alone. The good news is that learning from the pros is probably easier than you think.
To find out what billionaires are buying and selling, we just need to look. Every three months, the U.S. Securities and Exchange Commission requires all money managers who control $100 million or more to disclose their trading activity to the public.
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Everyday investors can learn a lot by following billionaire money managers, but it's important to remember that not every every bet they make pays off. Here's a closer look at two stocks that were popular with billionaires in the fourth quarter of 2023.
Amazon
Shares of Amazon (AMZN 3.43%) surged about 81% last year. Billionaire money managers buying the stock hand over fist were partly responsible for the gain. Ken Griffin of Citadel Advisors added a little over 4.3 million shares in the fourth quarter, and James Simons of Renaissance Technologies opened a new position by acquiring nearly 4.3 million shares.
Amazon's stock has surged this year because e-commerce profits came roaring back in 2023. Operating income from its North American segment swung to a very healthy $14.9 billion last year from a loss of $2.8 billion in 2022.
Amazon dominates the U.S. e-commerce market, but there's still plenty of room to grow. The U.S. Department of Commerce reported total retail sales that reached $1.83 trillion in the fourth quarter. E-commerce sales grew more than twice as fast as overall retail, but it's still only 15.6% of the total.
E-commerce isn't the only large addressable market that Amazon is quickly growing into. Its cloud segment, Amazon Web Services, increased sales 13% last year to $90.8 billion. Worldwide spending on cloud services is expected to grow 20.4% this year to reach $679 billion, according to Gartner.
Duolingo
The second top growth stock billionaire investors bought up in the fourth quarter was language learning specialist Duolingo (DUOL 3.64%). Israel Englander of Millennium Management increased its position more than fivefold by acquiring 178,357 shares in the fourth quarter. John Overdeck and David Siegel of Two Sigma Advisors and Two Sigma Investments added a combined 277,983 shares to already large positions.
Duolingo's smartphone application of the same name is gaining popularity at a hair-raising pace. There were 26.9 million daily active users on the platform in the fourth quarter of 2023, which was 65% more than it reported a year earlier.
Many of Duolingo's free users upgrade to paid subscriptions and conversions are accelerating thanks to relatively new pricing in international markets. There were 6.6 million paid subscribers at the end of 2023, which was 57% more than it had a year earlier.
Savvy growth stock investors are highly encouraged by Duolingo's ability to attract new members sustainably with a social-first marketing process. Viral videos starring its big green owl cost next to nothing to produce, but they regularly rack up millions of views. Sales and marketing expenses rose just 13%, while its gross profit soared 44% last year.
Duolingo stock is richly valued at about 64 times 2024 earnings expectations. That means investors who buy at recent prices could suffer heavy losses if the company's bottom line doesn't rise rapidly for a few more years. For some investors, this is a risk worth taking, but it might be best to wait for a more attractive price from this volatile growth stock.
