U.S. equity markets have seen a turbulent month since the end of February, when the S&P 500 peaked on Feb. 19 before beginning a sharp correction. As of March 27, the S&P 500 is down approximately 30% from Feb. 19 and 9% over the past 12 months.
In times of market turmoil, it can be helpful to review the holdings of top investing gurus and see which of their stocks have outperformed. In this review, we’ll take a look at some of the holdings of Warren Buffett (Trades, Portfolio), Chuck Akre (Trades, Portfolio) and Daniel Loeb (Trades, Portfolio)’s investing firms that have seen healthy gains over the past 12 months while also holding up well in recent market declines.
While there may be more undervalued opportunities in downtrodden stocks such as Delta Air Lines (DAL), the ones we’ll be talking about today have proven more resilient to declines while still being profitable investments in the long term.
Warren Buffett
Warren Buffett (Trades, Portfolio)’s Berkshire Hathaway (BRK.A, Financial) (BRK.B, Financial) has seen its investments in The Kroger Co. (KR, Financial) and Biogen Inc. (BIIB, Financial) perform well despite recent market declines.
The share price of Kroger, a supermarket chain, is up 20% over the past year and down 1% since Feb. 19, while the share price of Biogen, a biotech company, is up 32% over the past year and down 10% since Feb. 19.
Buffett and his investing lieutenants, Todd Combs and Ted Weschler, established holdings in both companies in the fourth quarter of 2019, near the top of the bull market. Buffett calls grocery a “tough business,” and he also typically stays away from businesses that he doesn’t understand. Thus, it seems likely that these allocations were influenced by Buffett’s lieutenants.
The Kroger bet may have been at least partially intended as a hedge against an economic slowdown, as grocery store earnings and stock prices tend to be relatively insulated from outside market conditions.
Meanwhile, Biogen is making progress toward the first FDA-approved Alzheimer’s drug, and its multiple sclerosis drugs make it a standalone leader in that field. Earnings have grown consistently throughout the company’s history, though the stock has often been undervalued according to the Peter Lynch chart.
You can view Buffett's portfolio as of Dec. 31, 2019 here.
Chuck Akre
Chuck Akre (Trades, Portfolio)’s Akre Capital Management, on the other hand, has seen two of its top holdings, American Tower Corp. (AMT, Financial) and SBA Communications Corp. (SBAC, Financial), outperform the broader market despite recent declines.
The share price of American Tower, a real estate investment trust that owns and operates telecommunications infrastructure, is up 5% over the past year and down 16% since Feb. 19, while the share price of SBA Communications, which is in the same business as American Tower, is up 25% over the past year and down 15% since Feb. 19.
The resilience of these stocks is due to their monopolies over the areas for which they own communications infrastructure. There are laws regulating the construction of cell phone towers and other such structures, meaning that whoever controls these properties has the sole right to collect fees from telecommunications companies who want to use it as part of their network.
Combine that with optimism for the rollout of 5G technology, which is expected to be profitable for American Tower and SBA Communications, and the share prices of these companies would be as recession-proof as utilities if they were not trading at price-earnings ratios above 50 and 190, respectively.
You can view Akre’s portfolio as of Dec. 31, 2019 here.
Daniel Loeb
Finally, Daniel Loeb (Trades, Portfolio)’s Third Point LLC has seen its holdings in Campbell Soup Co. (CPB, Financial) and Allergan PLC (AGN, Financial) outperform the broader market during the recent downturn.
The share price of Campbell, a soup and canned goods manufacturer, is up 8% over the past year and down 13% since Feb. 19, while the share price of Allergan, a name-brand pharmaceutical company, is up 15% over the past year and down 14% since Feb. 19.
Like grocery stores, companies like Campbell that provide non-perishable food items typically see their earnings remain stable or even increase during times of market turmoil.
Allergan, on the other hand, has entered into a definitive agreement to be acquired by AbbVie Inc. (ABBV) in a cash-and-stock transaction based on the closing price on June 25, 2019, which means that its share prices are extremely unlikely to fall below this level.
You can view Loeb's portfolio as of Dec. 31, 2019 here.
Disclosure: Author owns no shares in any of the stocks mentioned. The mention of stocks in this article does not at any point constitute an investment recommendation. Investors should always conduct their own careful research and/or consult registered investment advisors before taking action in the stock market.
Read more here:
- 3 Digital Health Care Stocks to Consider as Doctors Move Online
- Warren Buffett's Predictable Stocks Outperforming on Market Weakness
- 3 ETFs That Are Outperforming the S&P 500
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