You generally don't want to mindlessly copy someone else's portfolio, because different strategies work better for different investors. Not everyone has the same investment style, risk tolerance, financial goals, or time horizon. That said, there is nothing wrong with looking to investors -- especially ones with proven success -- for investment ideas.
There are two billionaires in particular, Warren Buffett and Cathie Wood, that investors often look to for inspiration. If you're looking for a few stocks owned by the billionaire investors to add to your portfolio, the following three are great options. These stocks are owned by Buffett's Berkshire Hathaway (NYSE: BRK.A)(NYSE: BRK.B) or Wood's ARK Invest.
1. Visa
Although Visa accounts for a small portion of Berkshire Hathaway's stock portfolio, it's one of the more surefire blue-chip stocks the Buffett-run company owns.
Visa's competitive advantage (and why it's one of my favorite stocks) is its vast reach. There are more than 4.3 billion Visa cards in circulation, and it's accepted by more than 130 million merchants globally. Both of those far exceed the runner-up, Mastercard. Visa's reach is also constantly expanding because of the network effect.
As a merchant, you're more willing to accept Visa cards because you understand they are the most common cards, and not accepting them could mean plenty of missed sales. As a potential cardholder, you're incentivized to go with Visa because you know it's the most accepted card globally. It's a win-win for the payment processing giant.
This network effect and organic growth also help Visa operate with margins that are hard to find at any company, regardless of industry. Its gross profit margin is routinely about 80%. For perspective, here's how it compares to other market leaders from various industries.
V Gross Profit Margin data by YCharts
Visa is well positioned to continue its market dominance. It has great brand recognition and a global reach, and will be a main beneficiary of the world's shift toward digital payments.
2. Meta Platforms
Meta Platforms (META -2.75%) is a stock held in Wood's popular ARK Innovation ETF and it's a member of the influential "Magnificent Seven." You could also argue that Meta is currently the best value of that esteemed group of companies, even after surging more than 130% in the past 12 months.
Meta has faced its fair share of problems during the past few years from a public relations standpoint, as well as a slowdown in advertising spending that inevitably took a toll on its revenue. The latter is important because Meta relies on advertising for close to 98% of its revenue. However, a more optimistic economic outlook and increased ad spending have taken the company's financials up to another level in the past year.
META Revenue (Quarterly) data by YCharts
Meta's vast reach (it's also a beneficiary of the network effect) makes it an essential go-to for advertisers looking to reach consumers of all types. Facebook may be Meta's leading platform, but Instagram, WhatsApp, and Messenger all contribute to the company's nearly 4 billion monthly active users.
A bonus to investing in Meta is the dividend the company declared for the first time in February. At $0.50 per share, with a dividend yield of around 0.40%, it's not one that income-seeking investors will drool over, but it can add to investors' total returns over time, and should continue to grow annually.
3. DraftKings
DraftKings (DKNG -0.81%) is another stock in Wood's ARK Innovation ETF. The sports betting giant is one of the biggest platforms in the industry, and should continue its momentum as the sports betting craze spreads.
The U.S. sports betting market has entered the mainstream, as 38 states and Washington, D.C. currently allow it in some form. This is a dramatic turnaround from just six years ago, when the U.S. Supreme Court decided to overturn its federal ban on commercial sports betting (with a few exceptions like Las Vegas).
DraftKings has taken full advantage of the relatively recent developments, too. Five years ago, at the end of the fourth quarter (Q4) of 2018, DraftKings had 1.7 million unique customers on its platform. Fast-forward to Q4 of 2023 and that number has skyrocketed to 7.1 million.
DraftKings is the No. 1 player in the online U.S. sports betting and iGaming industry, so it's in a good position to grow rapidly alongside the overall industry. Globally, online sports betting brought in about $43 billion in revenue in 2023. By 2029, it's forecast to generate more than $65.6 billion. There are still plenty of growth opportunities, and DraftKings's focus on capturing market share should give it long-term advantages.
