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 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.
Carl 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.
A secret billion-dollar stock opportunity
The world's biggest tech company forgot to show you something, but a few Wall Street analysts and the Fool didn't miss a beat: There's a small company that's powering their brand-new gadgets and the coming revolution in technology. And we think its stock price has nearly unlimited room to run for early in-the-know investors! To be one of them, just click here.
Investor Warren Buffett answers reporters' questions during a press conference to announce that Walt Disney will buy Capital Cities/ABC July 31.
Billionaire investor Warren Buffett of Omaha makes a rare public appearance during an autograph session outside Borsheim's Jewelry Store in Omaha, May 4. Buffett was signing autographs for shareholders in his company, Berkshire Hathaway, which is having its annual meeting May 5.
Billionaire businessman Warren Buffett sits with his wife Susan (R) and daughter Susie, prior to the annual Berkshire Hathaway shareholders meeting in Omaha, May 5. This marks a rare public appearance for the reclusive Buffett.
Arnold Schwarzenegger, Republican candidate for governor of California
in the October 7, 2003 recall election listens as world famous
investor, Warren Buffett (L), one of his financial advisors, speaks to
reporters after a meeting of Schwarzenegger's Economic Recovery Council
in Los Angeles August 20, 2003. REUTERS/Fred Prouser
Billionaire financier Warren Buffett looks on after a meeting with U.S. Senator Arlen Specter (R-PA) and chairman of the Senate Judiciary Committee, at the Hart Senate Office Building on Capitol Hill in Washington June 29, 2005. Specter is the co-author of a bill seeking to create a $140 billion asbestos compensation fund. REUTERS/Shaun Heasley SH/TC
Billionaire Warren Buffett arrives at the Sun Valley Resort in Sun Valley, Idaho July 10, 2007. The world's biggest media chiefs gather this week at the 25th annual Allen & Co. conference at the resort starting today. REUTERS/Rick Wilking (UNITED STATES)
Warren Buffett, chairman and CEO of Berkshire Hathaway, speaks at a Senate Finance Committee hearing about "Federal Estate Tax: Uncertainty in Planning Under the Current Law" on Capitol Hill in Washington, November 14, 2007. Billionaire Buffett warned of widening U.S. income disparity and endorsed the estate tax as a check on wealth accumulation, while two senior lawmakers said they want the tax repealed. REUTERS/Jason Reed (UNITED STATES)
Billionaire financier and Berkshire Hathaway Chief Executive Warren Buffett greets shareholders during the Berkshire Hathaway Annual Shareholders meeting in Omaha, Nebraska May 3, 2008. REUTERS/Carlos Barria (UNITED STATES)
Billionaire investor Warren Buffett laughs as he appears with Microsoft Corporation founder Bill Gates for a town hall style meeting with business students broadcast by financial television network CNBC at Columbia University in New York, November 12, 2009. REUTERS/Mike Segar (UNITED STATES BUSINESS)
Berkshire Hathaway Chairman Warren Buffett kisses his ukulele at the Berkshire Hathaway annual meeting in Omaha May 1, 2010. Buffett played "I've Been Working on the Railroad." REUTERS/Rick Wilking (UNITED STATES - Tags: BUSINESS TRANSPORT)
Billionaire financier and Berkshire Hathaway Chief Executive Warren Buffett (L) and Microsoft founder Bill Gates gesture at the national launch ceremony for the BYD M6 vehicle in Beijing September 29, 2010. Chinese battery and car maker BYD, backed by Buffett, launched its first premium multi-purpose vehicle (MPV) in Beijing on Wednesday to tap rising demand in the world's biggest auto market. REUTERS/Jason Lee (CHINA - Tags: TRANSPORT BUSINESS)
Billionaire Warren Buffett, wearing a traditional tikka or a red mark on the forehead, speaks during a news conference in Bangalore March 22, 2011. Buffett on Tuesday said he is looking to invest in large countries like India, China and Brazil, but added that restrictions on foreign ownership in India's insurance industry could be a deterrent. Buffett also said and the U.S. economy was improving and that the devastating earthquake in Japan would not hurt global growth. REUTERS/Stringer (INDIA - Tags: BUSINESS)
Berkshire Hathaway Chairman Warren Buffett tours the floor of the New York Stock Exchange September 30, 2011. REUTERS/Brendan McDermid (UNITED STATES - Tags: BUSINESS)
Berkshire Hathaway chairman Warren Buffett holds his hand over his heart during the singing of the national anthem, at the start of a 5km race sponsored by Brooks Sports Inc., a Berkshire-owned company, in Omaha May 5, 2013, a day after the company's annual meeting. Buffett at the meeting on May 4, 2013 gave the most extensive comments to date about the future of Berkshire Hathaway Inc after he is gone, saying he still expects the conglomerate to be a partner of choice for distressed companies. REUTERS/Rick Wilking (UNITED STATES - Tags: BUSINESS SPORT ATHLETICS)
Warren Buffett, Chairman of the Board and CEO of Berkshire Hathaway, poses for a portrait in New York October 22, 2013. REUTERS/Carlo Allegri (UNITED STATES - Tags: BUSINESS)
Roberta Buffett Elliott sits with her brother Warren Buffett as they attend an announcement ceremony at Northwestern University in Evanston, Illinois, January 28, 2015. The sister of financial investor Warren Buffett has given Northwestern University more than $100 million to create the Roberta Buffett Institute for Global Studies, the largest single gift in the school's 164-year history, the university said on Wednesday. REUTERS/Jim Young (UNITED STATES - Tags: BUSINESS EDUCATION SOCIETY)
Warren Buffett, chairman and CEO of Berkshire Hathaway, speaks at the Fortune's Most Powerful Women's Summit in Washington October 13, 2015. REUTERS/Kevin Lamarque/File Photo
Warren Buffett, chairman and CEO of Berkshire Hathaway, smiles before speaking with Bill Gates (not pictured), at Columbia University in New York, U.S., January 27, 2017. REUTERS/Shannon Stapleton