Are you a successful investor who’s already managing a portfolio worth billions for yourself and others? If not, then there’s probably a lot you can learn by following the handful of folks who can say they do.
Luckily for everyday investors like us, keeping tabs on billionaire investors is a lot easier than you might think. The U.S. Securities and Exchange Commission requires institutional investors to report their trading activity every three months on form 13-F, and the latest round of disclosures came with some eye-openers.
Image source: Getty Images.
Billionaires have been buying these three stocks left and right. Here’s why they find them so attractive.
Shopify
Ken Griffin and Citadel Advisors acquired over 1.7 million shares of e-commerce software giant, Shopify (SHOP 0.14%) during the second quarter. Griffin is probably encouraged by second-quarter gross merchandise volume (GMV) that rose 17% year over year to $55 billion.
It was even more encouraging to see second-quarter revenue that rose much faster than GMV or 31% year over year thanks to strong demand for its subscription and payments services.
Shopify merchants traditionally market to consumers, but second-quarter business-to-business (B2B) sales shot 61% higher year over year. Investors were also thrilled to see its point-of-sales investments paying off. Offline GMV rose 23% year over year.
Well-executed B2B and point-of-sale programs could give Shopify a big boost, but the stock market has already priced a lot of gains into the stock. It’s currently trading for 11.2 times trailing sales or more than 100 times earnings expectations. Any sign of a slowdown could lead to a swift and severe beating. If you’re a risk-tolerant investor ready to hold on for the long run, buying the stock now could be a smart move.
Archer Aviation
Earlier this month, innovation-based investing guru Cathie Wood and the Ark Innovation ETF she manages for Ark Invest acquired millions of Archer Aviation (ACHR -11.89%) shares. This company is rapidly developing small electric-powered vertical take-off and landing (eVTOL) aircraft.
Archer’s eVTOLs could begin ferrying folks through a city near you sooner than you probably imagine. Of course, exactly when is still a matter of debate. Shares of Archer and its peers such as Joby Aviation recently tanked after the Federal Aviation Administration (FAA) published a report that suggested air taxis won’t begin entering the national airspace until 2028.
When the FAA is finally ready for air taxis, there’s a good chance that Archer’s Midnite aircraft will be one of the first to see lots of action. The administration recently cleared it to begin flight test operations.
We don’t know when Archer Aviation will be able to record regular air taxi sales, which makes the stock hyper-risky. Despite the uncertainty, the company sports a $1.7 billion market cap at the moment. If you’re going to invest in this stock, make sure it’s a very small part of a diverse portfolio.
Uber Technologies
In the second quarter, James Simons and Renaissance Technologies bought over 5.7 million shares of Uber Technologies (UBER -1.61%) stock. An operating profit in the second quarter and a growing presence in the global trucking industry should have them feeling pretty good about their purchase decisions.
Uber held second-quarter operating expenses steady. Combined with surging mobility revenue, the company was able to turn an operating loss of $713 million in the previous year period to a gain of $326 million.
Freight revenue fell to $1.3 billion, and Uber blamed a challenging market cycle. The recent decline is disappointing, but this is still 267% more freight revenue than the company reported two years earlier. The global trucking industry is worth an estimated $4 trillion annually, which means this could be a huge source of growth in the years to come.
Right now, Uber is trading for the lofty multiple of 35 times forward earnings expectations even though it’s just beginning to generate an operating profit. While it has what it takes to deliver market-beating gains, the stock could get hammered if its bottom line dips into negative territory again. If you’re going to follow Simons into this stock, be sure to make it a small part of a diversified portfolio.
Cory Renauer has positions in Shopify. The Motley Fool has positions in and recommends Shopify and Uber Technologies. The Motley Fool has a disclosure policy.
Credit: Source link
