Every three months, large hedge funds with over $100 million in assets are required to file a form that discloses their holdings, as of the end of the prior quarter.
This form, called a 13F filing, shows what the world's biggest money managers bought in the last quarter… what they sold… and what they're holding on to.
Because it can be filed within 45 days of a quarter's end, it's not a perfect snapshot of what these hedge funds are doing. But it's the closest thing regular investors have to a window into where the sharpest, most influential minds in finance are putting their money now.
Here's a glimpse on what the world's top funds are doing now.
Berkshire Hathaway
Warren Buffett's Berkshire Hathaway isn't technically a fund, but rather a stock that has holdings in many different companies.
That said, Berkshire is required to submit 13F filings that are worth scrutinizing for all the same reasons that those of the world's greatest hedge funds are. Berkshire is gargantuan, with a market capitalization approaching $700 billion and over $325 billion in cash.
In its November filing, Berkshire revealed a $550 million stake in Domino's Pizza (DPZ) while it continued to unload millions of shares of Apple Inc. (AAPL). It still has 300 million shares of Apple, however.
Since its 1965 inception, Berkshire Hathaway shares have achieved an average annual return of 19.8%. That's a 3,747,646% return since inception, according to Buffett's 2023 letter to shareholders.
Third Point
Billionaire Dan Loeb's Third Point fund had a rough 2022, returning -21.1% for the year compared to the S&P 500's 17.7% dip. The underperformance came thanks to Third Point's heavy exposure to tech stocks, which took the brunt of the selloff.
But performance recovered sharply in the last quarter of 2023, and Third Point's long-term track record is stellar. From its 1995 inception through 2016, Third Point returned an average annual gain of over 15%. Its startup-focused arm, Third Point Ventures, has done even better, notching an average annual return of 16% since its inception in 1995.
A 16% annual gain for 27 years is enough to turn every $10,000 invested into over $540,000.
Third Point's holdings are largely concentrated among just a few stocks. In fact, the five stocks above comprise over 70% of its holdings, as of December 31.
Third Point's biggest holding, PG&E Corp. (PCG) is one point of disagreement with Buffett, as Berkshire Hathaway has repeatedly shot down rumors of buying PG&E's parent utility company. But Third Point's other holdings are well-represented by dividend-paying juggernauts. The health insurance provider UnitedHealth Group Inc. (UNH), for instance, has raised its dividend by a stellar 5,400%, from $0.03/share to $1.65/share since 2010.
Appaloosa LP
Billionaire David Tepper's Appaloosa LP, since its 1993 inception, has achieved average annual returns of 25% per year.
That rate of return exceeds Berkshire Hathaway's (though Berkshire Hathaway has achieved its market outperformance for nearly 40 years longer). A 25% average return since 1993 would turn $10,000 invested into over $7 million.
Like Buffett and Loeb, Tepper has a utility company among his top five holdings. And like his fellow billionaires, Tepper has included dividend powerhouses among his fund's top holdings. Constellation Energy Corp.(CEG), for example, doubled its dividend last year. Tepper also established a new position, buying $26 million worth of Walt Disney Company (DISN) stock. Disney has raised its dividend by 486% since 2011. Like Loeb's Third Point, Tepper's Appaloosa has a stake in UnitedHealth Group, though it's a far smaller position at $80 million.
Appaloosa is almost as concentrated among its top holdings as Third Point and Berkshire, with its top five holdings making up over 55% of its portfolio. This reflects a common practice among the world's most successful investors: Find a few high-conviction investment ideas, establish bold positions, and be willing to wait years or even decades for them to come to fruition.
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