Investing alongside the world’s top value investors, or super investors, can be a profitable strategy if you know what you’re doing.
Combing through super investor ideas and then conducting your own research to arrive at a suitable conclusion without blindly following hedge fund managers is the best way to go about this, and the best place to look for ideas is in 13F SEC filings, which are easy to access and understand.
If you don't have time to read through the filings for yourself, Web sites such as GuruFocus and Dataroma compute the data for you.
Crunching numbers
Dataroma's presentation of the figures is more basic than that of GuruFocus, but the raw data is still helpful. The site tracks the portfolios of 64 of the world's most prominent super investors including the likes of Mohnish Pabrai, Glenn Greenberg (Trades, Portfolio), Charlie Munger (Trades, Portfolio), Warren Buffett (Trades, Portfolio), Nelson Peltz, Bill Ackman (Trades, Portfolio) and Carl Icahn (Trades, Portfolio) to name a few.
What's more, the site also aggregates the data to give an overview of those stocks the world's value investors like the most. Based on this data, here's a list of super investors' top 10 most loved companies in the Standard & Poor's 500, according to third-quarter 13F filings.
The most loved
At the head of the list, the company most loved by all 64 super investors comprising 2.4% of all the equity portfolios monitored is Berkshire Hathaway (BRK.A, Financial)(BRK.B, Financial). Buffett's conglomerate is loved by one-third of the funds tracked by Dataroma with 15 of the 64 funds monitored holding positions in the stock.
The next most loved position is Wells Fargo (WFC, Financial). While it remains to be seen if the company is still held in high regard by super investors after the recent scandals, at the end of the third quarter Wells Fargo positions totaled 2.3% of the entire equity portfolio monitored. Seven funds initiated positions in the stock during the third quarter.
Microsoft (MSFT, Financial) follows Wells with a combined ownership of 1.4%. Interestingly, more funds own positions in Microsoft than Berkshire Hathaway (20 to 15), but positions in Berkshire are larger.
Bank of America (BAC, Financial) sits in fourth place with a combined ownership of 1.2%. At the bottom of the top five is Oracle Corp. (ORCL, Financial); 14 of the 64 super investor portfolios monitored own positions in Oracle.
The companies sitting outside the top five are American Express (AXP, Financial) (0.81% of combined portfolios), Apple (AAPL, Financial) (0.78% of combined portfolios), IBM (IBM, Financial) (0.78% of combined portfolios) – Apple is the more widely owned position here with 14 funds owning a position compared to IBM's nine –Â MasterCard (MA, Financial) (0.76% of combined portfolios), Citigroup (C, Financial) (0.73% of combined portfolios) and Charles Schwab (SCHW) (0.72% of combined portfolios).
Not as easy as it appears
However, after saying all the above, I should point out following the world's super investors into positions is not as easy as it may first appear. As these positions are reported within 13Fs, there's no telling exactly when the super investor bought the position; 13Fs are published more than a month after quarter end and do not reveal the exact date of purchase so by the time the position is made public it could have been in the portfolio for as many as four months and could even have been sold.
The returns of the iBillionaire Index, which tracks the top U.S. equities held by a select pool of leading billionaire investors, are testament to how difficult it is to follow wealthy investors' shareholdings. Year to date the index has returned 6.65% compared to a return of 11.1% for the S&P 500. Over the past five years, the iBillionaire index has returned 17.8% compared to a return of 28.9% for the S&P 500.
Conclusion
All in all, tracking the positions of the world super investors may help you uncover investment ideas, but you must always do your own research before entering a position. A super investor may have an entirely different reason for investing than you.
Disclosure: The author owns shares of IBM.
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