During times of macroeconomic stresses and uncertainty, it is only normal for the everyday folk to look toward the experts. The more seasoned players in the markets have great know-how and employ top financial analysts, with robust models. Moreover, they are far more likely to have sailed through similar circumstances in the prior years and decades. For this reason, their investment decisions provide critical guidance as to what the average investor could do with their capital. This is highly advantageous as big investors have a significant portion of their net worth tied into their equity portfolios. For this reason, this class of market players is definitely worth keeping an eye on during tough market conditions. In this article, we shed light on 5 stocks that market heavyweights have been stocking up on during present conditions. These stocks cover a wide range of industries and hold unique strengths worth betting upon.
Big Investor Stock #1: Chevron
Oil giant, Chevron Corporation (NYSE: CVX) is the first stock to catch our attention. During the second quarter of 2022, investor kingpin Warren Buffett invested heavily in Chevron, with the total equity purchase at an incredible $21 billion. To put the magnitude of this transaction in context, the prior year’s comparable quarter saw Buffet’s company, Berkshire Hathaway spend a total of $2.5 billion in equity purchases. This represents a staggering 316% increase in total CVX holding, which saw a climb up to 8% ownership of Chevron.
Buffet evidently realizes how favorable the present inflationary conditions are for the oil industry. With the rise in general commodity prices, especially crude oil, higher revenue translates to substantially wider profit margins. Just in the recent quarter, Chevron reported a 70% year-on-year increase in its quarterly revenue figure.
Some would rightfully question the sustainability of such profitability where consumers face sky-high prices. To add to concerns, the climate movement and related government policies add further pressure. Chevron takes a proactive approach to these issues, which are intrinsically linked to its survival. The company has carried out a number of high-profile business acquisitions of clean energy companies, such as Renewable Energy Group (NASDAQ: REGI).
Big Investor Stock #2: Xerox
When people think of Xerox Holdings Corporation (NASDAQ: XRX), they assume it to be a dying and outdated business. However, the market giant Carl Icahn certainly does not feel that way. The company, which is now a workplace management specialist, has quite a bit to offer. In the first quarter of this year, Icahn purchased over 4 million XRX shares, upping his total ownership to 34.2 million, or 22% of the company. This makes him the largest shareholder of the company.
Amidst poor quarter 1 earnings, many speculate that this buying decision is the result of the low share price of the stock. XRX is presently trading at a price range as low as its pandemic level plunge in 2020. Icahn is famous for being a vocal and active shareholder who pushes for managerial change at the board meeting level. His position as the largest shareholder is likely going to see some heavy change and restructuring efforts in the company. For this reason, it may be wise to catch this train before it is refined for financial sustainability and growth.
Big Investor Stock #3: Medtronic
Ray Dalio is a hedge fund manager that most financial market participants look up to. He has one of the most historically successful track records as an investor, and famously predicted the housing bubble crash of 2008. Dalio’s latest investment in the first quarter of 2022 was in Medtronic PLC (NYSE: MDT). This medical device specialist is renowned for being a stable growth stock, which capitalizes upon the economies of scale advantage. As a result of this, it holds market leadership in the neuroscience, spinal and cardiovascular markets. With rising demand for healthcare services, a market leader such as MDT is simply too good an option to ignore.
Another advantage that the stock holds is its impressive dividend trends, a crucial variable that Dalio had considered. MDT has been consecutively increasing its dividend payout for the last 45 years without fail. This, coupled with its reduced price due to the wider bear market makes it an ideal money-maker.
Given that Medtronic operates within the emerging market category, its upside growth potential is truly substantial. As developments in the medical world continue to see breakthroughs, the industry’s approach to treatment also optimizes and sees refinement. Investing in the lead player in this dynamic area is the best bet one can take to see tremendous growth.
Big Investor Stock #4: Booking Holdings
Michael J Burry is most well-known for his role in the renowned bestseller, The Big Short, by Michael Lewis. His bold investments triggered the infamous Reddit-led short squeeze of 2021. More recently, the travel and dining reservation company, Booking Holdings Inc. (NASDAQ: BKNG) seems to have caught the investment expert’s attention.
2021 saw a resurgence in travel and leisure, following the end of Covid-lockdowns and mass vaccine distribution. Investors understandably rushed to big-name stocks within this category, with BKNG being the most widely traded, given its substantial scale of operations. In November of 2021, the stock hit its all-time high with a price of almost $2620. This coincided with an EBIT margin improvement from 8.5% to 23% over a one-year period. Moreover, the upside potential remains quite high, as Booking is yet to hit its pre-pandemic margin range of above 35%.
In 2022’s first quarter, Booking reported $27 billion in gross bookings, which is 130% higher than the prior year’s comparable quarter. It is evident that this improvement points to a wider upward surge in global travel trends. This comes despite wider disruptions in Eastern Europe, given Russia’s invasion of Ukraine. Burry has clearly identified a significant opportunity here and is taking a large bet to chase after it.
Big Investor Stock #5: Salesforce
In the tech realm of SaaS, investors typically go for Microsoft Corporation (NASDAQ: MSFT). This is because of its dominance over enterprise software and similar areas. George Soros, however, takes a different viewpoint and sees Salesforce Inc. (NASDAQ: CRM) as being more valuable, and a better bet. CRM leads the cloud-based customer relationship management domains in a robust demand environment. This is supported by the company reporting consecutively growing revenue figures for the last 72 quarters.
The company is highly financially sustainable, given its subscription-based business model. Through this, the company reports some of the lowest customer churn rates in the industry at 7%. Moreover, the upside potential remains incredibly high, as most businesses are yet to undertake digital transformation initiatives to varying degrees. The company projects its addressable market to surpass $13 billion by the end of the year. By 2029, this will more than double, to reach over $33 billion. This growth is highly promising, as is indicated by the investment from George Soros.
Each of the stocks listed above holds potential that different market giants find promising. While it is true that the investors discussed above hold different underlying assumptions and investment strategy philosophies, their approaches do offer critical guidance. During present market uncertainties, such guidance is the critical need of the hour for everyday investors looking to optimize their investment portfolios.