In this video, Motley Fool analysts Matt Koppenheffer and David Hanson talk about some recent investing decisions made by billionaire fund managers and what individual stock investors can take away from them.
Recently, Bruce Berkowitz of the Fairholme Fund got bullish on financial stocks right around the same time that John Paulson got bearish and sold positions in Citigroup (C 7.16%), Bank of America(BAC 2.38%) and JPMorgan Chase (JPM 2.39%).
What should investors make of this?
Most of the time, investors are best served by ignoring what fund managers are doing, David says. Selling financial stocks may not mean that they don't like the stocks, but that they see opportunities they like better.
But some fund managers tend to buy stocks for the long haul, and keeping watch on their decisions could benefit investors, David says.
Matt cautions against hero worship of big fund managers. Some of these managers, like Paulson, strike it big with one call and then find legions of fans following their next moves. It's easy to be led astray, Matt says.
Follow their moves for ideas, Matt says, but don't follow them blindly.