3 stocks billionaires love

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Billionaires Love These 5 Stocks

Billionaire investors Warren Buffett, George Soros, and Carl Icahn are among the most tracked and emulated investors on the planet, and for good reason. All three have carved out billions of dollars in gains over investing careers stretching back 50 or more years.

Although investors should always do their own homework, each of these billionaires recently filed 13F reports with the Securities and Exchange Commission that show what stocks they've been buying. Since those 13Fs can be a treasure trove for new investment ideas, let's take a closer look at three stocks Buffett, Soros, and Icahn are betting will go higher.

Warren Buffett Speaks At Conference Focused On Detroit's Revitalization

Warren Buffett bets on an energy bargain
Buffett's legendary buy-and-hold investing style has turned Berkshire Hathaway(NYSE: BRK-A)(NYSE: BRK-B) into a global conglomerate with more than $100 billion in equity investments, and in the fourth quarter, one of Berkshire Hathaway's most interesting buys was Kinder Morgan(NYSE: KMI).

Kinder Morgan is one of the largest energy-infrastructure companies in North America, and its pipelines kick off plenty of investor-friendly cash flow that in the past was returned to investors via dividends. However, facing headwinds tied to the global crude oil glut, Kinder Morgan announced plans in December to cut its dividend by 75% to limit debt and protect its investment-grade credit rating.

Historically, Buffett has favored companies that use their cash flow to improve their business, rather than pay dividends, and Kinder Morgan's debt plan could be why he's become a fan, but his $400 million stake could also be tied to a broader belief that a steep sell-off in the sector has made energy stocks a bargain. In 2015, Kinder Morgan's shares fell 63%.

Although Buffett may think that Kinder Morgan's shares are cheap, he's recently been a bit more active with energy stocks in his portfolio, and that suggests that investors interested in owning Kinder Morgan may want to keep a close tab on Berkshire Hathaway's future filings to see if his opinion changes.

George Soros' bets on interest rates
George Soros is the legendary investor behind Soros Fund Management, and Soros Fund Management made a big 7.1 million-share bet on Synchrony Financial(NYSE: SYF) last quarter.

Synchrony Financial is the legacy credit card business spun out of General Electric(NYSE: GE) Capital as part of a restructuring in July 2014. The company is the largest store-brand credit card issuer in the United States, and its credit card partners include the retail giants Wal-Mart and T.J. Maxx.

Soros Fund Management's acquisition hints that the fund's managers believe that credit card rates -- and the profits associated with the spread between Synchrony Financial's borrowing and lending rates -- are heading higher. Last year, Synchrony Financial reported net interest income of $12 billion, up 7%, and net profit of $2.1 billion, up 5% from last year, so an improvement in spreads could move the needle nicely.

Admittedly, Soros' fund usually takes a rapid-fire approach to investing that has them moving in and out of positions quickly, but the size of its Synchrony Financial position may indicate a willingness to stick around longer than normal. You might want to, too.

Xerox BreakupCarl Icahn's latest activism
Activist investor Carl Icahn's most intriguing buy last quarter was a nearly $1 billion stake in Xerox Corporation(NYSE: XRX), the long-standing business service company best known for its copiers, and given that Xerox announced a restructuring in January, Icahn may already be putting his stamp on the company.

Xerox plans to split into two publicly traded companies: one that focuses on document technology, and another that does business process outsourcing (BPO). The document technology business and BPO business will have roughly $11 billion and $7 billion in trailing sales, respectively.

In addition to the split, Xerox is also taking an eraser to its expenses. Management expects cost-saving moves to cut expenses by $700 million this year and that the split will allow the company to shave $2.4 billion in expenses over the coming three years. Those savings should offer a nice tailwind to profit. Since Xerox expects the deal to close by the end of this year, investors interested in following in Icahn's footsteps might want to get involved sooner, rather than later.

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RELATED: Warren Buffett through the years

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Warren Buffett through the years
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3 stocks billionaires love
Warren Buffett speaks to the media during a press conference Monday, June 26, 2006 in New York. Buffet, the chairman of Berkshire Hathaway, recently announced his intention of giving 10 million shares of his company to charitable organizations, the majority going to the Bill and Melinda Gates Foundation. (AP Photo/Seth Wenig)
NEW YORK, UNITED STATES: California Governor Arnold Schwarzenegger (L) cofers with billionaire investor Warren Buffet (R) during a meeting with Wall Street investors at the Ritz Carlton hotel February 25, 2004 in New York City. AFP PHOTO/POOL/Kathy WILLENS (Photo credit should read KATHY WILLENS/AFP/Getty Images)
Investor Warren Buffet participates in the Treasury Conference on U.S. Capital Markets Competitiveness, Tuesday, March 13, 2007, at Georgetown University in Washington. (AP Photo/Gerald Herbert)
CLEVELAND - MARCH 25: Philanthropist Warren Buffet (C) wears a LeBron James Witness tee-shirt as he cheers for the Cleveland Cavaliers during a game against the Denver Nuggets March 25, 2007 at The Quicken Loans Arena in Cleveland, Ohio. NOTE TO USER: User expressly acknowledges and agrees that, by downloading and/or using this Photograph, user is consenting to the terms and conditions of the Getty Images License Agreement. Mandatory Copyright Notice: Copyright 2007 NBAE (Photo by David Liam Kyle/NBAE via Getty Images)
** FILE ** In this May 21, 2008 file photo, U.S. Billionaire investor Warren Buffet speaks during a news conference in Madrid. Buffett's Berkshire Hathaway Inc. is investing at least $5 billion in Goldman Sachs Group Inc., Goldman announced Tuesday, Sept. 23, 2008. (AP Photo/Paul White, file)
Warren Buffet, chairman of Bershire Hathaway, arrives for the annual Allen & Co.'s media conference Wednesday, July 9, 2008, in Sun Valley, Idaho. (AP Photo/Douglas C. Pizac)
FILE - In this May 2, 2009 file photo, Warren Buffett, CEO of Berkshire Hathaway, right, waves to shareholders prior to the annual Berkshire Hathaway shareholders meeting in Omaha, Neb. Warren Buffet's Berkshire Hathaway said Tuesday, Nov. 3, 2009, it has agreed to buy Burlington Northern Santa Fe in a deal valuing the railroad at $34 billion.(AP Photo/Nati Harnik, file)
Warren Buffet heads to lunch after a morning session at the Sun Valley Inn for the 2011 Allen and Co. Sun Valley Conference, Thursday, July 7, 2011, in Sun Valley, Idaho. (AP Photo/Julie Jacobson)
Warren Buffett is interviewed in the White House Briefing Room in Washington, Monday, July 18, 2011, following his meeting with President Barack Obama. Obama met with members of the Giving Pledge including, Buffett and Bill and Melinda Gates, and others to receive and update on the program. (AP Photo/Pablo Martinez Monsivais)
Billionaire investor Warren Buffet at the Allen & Company Sun Valley Conference in Sun Valley, Idaho, Friday, July 13, 2012. (AP Photo/Paul Sakuma)
Warren Buffett, chairman of Berkshire Hathaway Inc., right, speaks to David Rubenstein, co-founder and managing director of the Carlyle Group, during the Economic Club of Washington dinner event in Washington, D.C., U.S., on Tuesday, June 5, 2012. Buffett said he doesn't expect another U.S. recession unless Europe's crisis spreads. Photographer: Andrew Harrer/Bloomberg via Getty Images
DETROIT, MI - SEPTEMBER 18: Billionaire investor Warren Buffett speaks at an event called, 'Detroit Homecoming' September 18, 2014 in Detroit, Michigan. The purpose of the invitation-only event of Detroit expatriats is to give the group a chance to reconnect, reinvest and reinvent with their hometown. The topic of Buffet's conversation was, 'Why I'm Bullish on Detroit.' (Photo by Bill Pugliano/Getty Images)
Warren E. Buffett, Chairman of the Board and Chief Executive Officer, Berkshire Hathaway Inc., participates in a NADA Automotive forum happening in conjunction with the New York International Auto Show, Tuesday, March 31, 2015, in New York. (AP Photo/Mary Altaffer)
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