Stocks the Investing Legends Are Buying

Scraping together enough coin to win the annual luncheon auction with Warren Buffett is probably beyond the means of most investors. With the proceeds going to benefit charity, last year's winning bidder forked over $1.68 million for the privilege.

But many investors would love the chance to chow down with Buffett and pick his brain on his investment philosophy and stocks he's considering buying. The same could probably be said for many other value investing legends, too.

Feast or famine
Maybe we can't break bread with the greats, but we can peek at their stock ideas through their SEC filings. What we'll do here is pore over the reports of some of the top investors and see which stocks they've chosen as their best investments. We'll then check in with Motley Fool CAPS members to see if they agree.

Obviously, there are a few caveats with a strategy of piggybacking on the masters:

• There's a delay from when the stocks were bought and when they file their paperwork. If they were a good deal back then, are they still a good deal today? Have they sold out since?
• These legends may be hot investors now, but that can change in an instant. Bill Miller was a wunderkind for beating the market 15 years in a row -- then he went cold for three. He came back in 2009, but we don't know what 2010 will bring.

Contrary to popular opinion
That's why we say you'll need to do further research, but with those points in mind, let's take a look at Steve Mandel, the founder of Lone Pine Capital, which has an equity position valued at more than $10 billion. Mandel was formerly a managing director and consumer analyst at Tiger Management, which was run by another legendary investor, Julian Robertson. Robertson was able to return on average 25% annually over the course of two decades.

Robertson spawned a number of like-minded money managers such as Mandel -- they're humorously known as Tiger Cubs -- who fall into the "growth at a reasonable price" camp, but pay special attention to the quality of the company's management. Mandel has said, "As you can guess, we're not bottom-fishers."

Fund: Lone Pine Capital
Website: www.lonepinecapital.com
No. of Positions Owned: 53
Top 5 Holdings: JPMorgan Chase (NYSE:JPM), Monsanto (NYSE:MON), Baxter International, Qualcomm (NASDAQ:QCOM), Apple (NASDAQ:AAPL)
Top Sectors: Information Technology, Financials, Consumer Discretionary

Typical of hedge funds, Lone Pine Capital is somewhat secretive, but you can look at some of Mandel's best ideas below. They represent completely new additions to his portfolio at the time of the filing and were the largest purchases relative to the size of the portfolio.

Source: SEC Filings.

Naturally, we want you to look a bit closer at these stocks before buying. You can get low-priced appliances in the dent-and-ding section of your home-remodeling superstore, but their quality might not be so good. Same thing here: Make sure there's nothing seriously wrong with the company before you plug it into your own portfolio.

Price is what you pay
With the addition of Wells Fargo and HSBC to his portfolio, Steve Mandel is making a bet on improving financial conditions both here at home and internationally. Considering the trembling that Greece caused world markets in recent weeks, that emphasis on financials would seem to be a risky bet, even if the European Union and the International Monetary Fund have pledged to prop up the country. Should that domino topple, however, a lot more will likely come tumbling down after.

Mandel's in good company, though, as Buffett recently increased his stake in Wells Fargo as well, growing the number of shares he owns in the bank by another 2% to 320.1 million shares.

Investors also remain confident in Wells' ability to persevere, with 87% of the more than 4,100 CAPS members rating the banking institution indicating they think it will outperform the broad market averages. sleepingdragon thinks Wells' asset base will be a firm foundation:

Has an enlarged asset base that will increase earnings moving forward. Disciplined management. Wachovia acquisition seems to be going well.

Value is what you get
It pays to start your own research on these stocks on Motley Fool CAPS. Read a company's financial reports, scrutinize key data and charts, and examine the comments your fellow investors have made, all from a stock's CAPS page.

Sign up today for the completely free service, and tell us whether these stocks are as good a value as these investing legends think they are.