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3 Stocks Billionaires "Hate"

By Todd Campbell - Feb 28, 2016 at 7:40AM

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Warren Buffett, George Soros, and Carl Icahn sold off shares in Chicago Bridge & Iron, NextEra, and Apple Inc. last quarter.


Warren Buffett, George Soros, and Carl Icahn are legendary for making billions of dollars over their decades-long investing careers, and that can make following in their footsteps wise, especially when it comes to avoiding stocks they think could be about to drop. Fortunately, these billionaires must file a 13F report with the Securities and Exchange Commission every quarter that shows what stocks they're selling. Among the most notable stocks they sold last quarter were these three companies. Should you sell them, too? Read on to find out.

Warren Buffett sours on energy infrastructure
Buffett is iconic for his buy-and-hold investing style, and his Berkshire Hathaway (BRK.A 3.75%) (BRK.B 4.02%) has grown into a global investing Goliath, with a stock portfolio worth more than a $100 billion.

Because of Buffett's long-minded approach, his decision to exit shares in Chicago Bridge & Iron (CBI) was especially interesting. Berkshire Hathaway was once Chicago Bridge & Iron's biggest investor, but Buffett's steadily been reducing his position in the energy infrastructure company. Last quarter, he finished unwinding his stake.

Buffett's decision to punt Chicago Bridge & Iron from his portfolio probably stems from fear that cuts to capital budgets at oil and gas producers will continue to weigh down its top- and bottom-line growth. Because crude oil prices have fallen dramatically in the wake of a buildup in capacity over the past decade, producers are shelving plans for new projects. Uncertainty surrounding energy prices isn't likely to end anytime soon, so it's not a stretch to think that Buffett believes his money might be best spent elsewhere. You might benefit from thinking similarly. 


George Soros opts out of utilities
George Soros' Soros Fund Management is famous for navigating markets, and while Soros' short-term investment approach isn't right for everyone, it can be helpful to keep an eye on his top sells, too.

Last quarter, NextEra Energy (NEE 1.06%), a large Florida-based utility, was Soros Fund Management's biggest sale. It's unlikely Soros Fund Management exited NextEra over fear that air conditioning demand is about to drop in the Sunshine state. Instead, the fund's decision is probably based on the fact that utilities' financing costs are about to climb as interest rates rise. The extraordinarily high cost of utilities' capital projects makes the industry especially susceptible to interest rate risk, and that risk is compounded by the fact that it can be hard to pass along higher financing costs in highly regulated markets.

Rather than face those headwinds, Soros opted to discard more than 1 million shares of NextEra, freeing up over $100 million that could be invested in other less interest rate-sensitive ideas. Because utilities represent less than 0.05% of Soros Fund Management's portfolio, investors imitating Soros may be best served ignoring this sector altogether.

Carl Icahn reduces biggest stake
Carl Icahn may still own a freighter-full of Apple Inc (AAPL 2.45%) stock, but he did reduce his position by 13% last quarter, and that decision could indicate a growing dislike of the big-cap technology giant. Overall, Icahn eliminated 7 million shares of Apple from his portfolio, unlocking more than $650 million.

Icahn's sale of Apple came ahead of scrutiny tied to the company's decision not to develop software that could hack into an iPhone used by one of the San Bernardino terrorists. It also came ahead of Apple's admission last month that iPhone sales could slip this quarter because iPhone owners are keeping previous-generation devices longer, rather than upgrading to the iPhone 6S.

Given that Icahn is famous for making big bets in companies that he can shake up or break up, and that Apple has a history of marching to the beat of its own drum, it wouldn't shock me if Icahn continues to cut his stake and therefore owns fewer shares of Apple next year than it does today. However, even if that's true, investors might not want to be as pessimistic as Icahn. After all, Apple has a history of innovation that's scary-good, and with a low valuation and a 2.2% dividend yield, there's plenty of reason to stay put.


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Stocks Mentioned

Apple Inc. Stock Quote
Apple Inc.
$141.66 (2.45%) $3.39
Berkshire Hathaway Inc. Stock Quote
Berkshire Hathaway Inc.
$417,401.43 (3.75%) $15,101.43
Berkshire Hathaway Inc. Stock Quote
Berkshire Hathaway Inc.
$278.28 (4.02%) $10.76
NextEra Energy, Inc. Stock Quote
NextEra Energy, Inc.
$78.02 (1.06%) $0.82
Chicago Bridge & Iron Company N.V. Stock Quote
Chicago Bridge & Iron Company N.V.

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