How are you supposed to know what rich investors are scooping up? The key is found in something called Form 13F, which investment firms, hedge funds, and generally super rich must file with the Securities and Exchange Commission (SEC) each year.
Form 13F gives the general public an all-important glimpse at where these successful investors are putting their money, which you can then use to inform your own investments if you so choose. Here are 3 stocks that rich investors have been buying in spades.
Coinbase (COIN) Gives Institutions Crypto Exposure
Much of 2021’s investment news — especially the early months — has been dominated by one buzzworthy investment opportunity: cryptocurrency.
From serious contenders like Bitcoin and Ethereum to meme currencies like Dogecoin, crypto has been king for the duration of the year and has even made skilled retail investors and traders a fortune off of fast-footed buying and selling.
As a trusted and reliable place to buy and sell cryptocurrency, Coinbase has been incredibly successful among crypto traders.
Coinbase also happens to be a publicly traded stock on the New York Stock Exchange that went public in April of 2021. Given its popularity and its newness, it’s clear to see why so many rich investors thought to snatch up some shares in the company – COIN offers a way for institutions to gain exposure to crypto without actually buying digital coins.
Alas, Bicoin and other cryptocurrencies have been volatile in the past few months, so this investment in Coinbase is fraught with price fluctuation.
Still, it wouldn’t be entirely out of the ordinary to see Coinbase stock shoot up to new heights if one or more cryptocurrencies starts skyrocketing like in the early months of 2021.
One factor that could add credence to that view is that Coinbase CEO, Brian Armstrong, has stated he will allocate 10% of profits to buying cryptocurrency assets.
Snowflake (SNOW): A Rare IPO Berkshire Bought
The cloud has been all the rage over the past several years or so, and only became more popular after the coronavirus sent countless businesses from the office to work-from-home.
The cloud allows a person (or a group of people) to conveniently access important files and documents from anywhere they can find an internet connection, making it a must-have solution to being spread out all over the city, the state, or even the country.
As a result, wealthy investors found it worthwhile to take out shares in Snowflake (SNOW), a company that acts as a hypergrowth cloud data warehouse for users.
Looking at Form 13Fs across the board, rich investors collectively picked up nearly eight million in Snowflake shares on top of the nearly 185 million shares that these wealthy investors already possessed from years prior.
Now, this brings an important question to mind: Why Snowflake? Aren’t there all kinds of other cloud data warehouses to invest in?
It seems that these ultra-rich investors favor Snowflake’s competitive advantages more than any other cloud company, and they really trust that Snowflake will continue to grow more successful based on the company’s product revenue doubling recently.
The Snowflake value proposition to customers is so compelling that even Warren Buffett’s lieutenants at Berkshire Hathaway snapped up share pre-IPO, and by all accounts continue to hold shares.
Zoom (ZM) Fair Value Sits At $404 Per Share
Zoom Video Communications has been at the center of the work-from-home movement over the past 18 months or so, effectively facilitating the world’s ability to still meet and collaborate as a virtual group despite being physically separated in real life.
Without Zoom (ZM), there’s no doubt that the push to work from home would have been a whole lot harder than it was back in March of 2020.
Naturally, rich investors have a lot of faith in Zoom as a continued tool in the workplace — it was one of the most popular stocks on the Form 13F this year.
Looking at the numbers, there were over 138 million shares in Zoom across all the Form 13F filers. This increase in purchases probably has a lot to do with the decrease in price per share for Zoom, which hit a massive high of $559 in October of 2020 and has since dropped to almost half that, around $330 per share.
As more workplaces and classrooms face potentially returning to work-from-home as delta variant and other COVID-19 variants increase across the nation and the world at large, it’s possible that Zoom stock could tick back up to that high it reached in October of 2020.
Zoom has a 20% upside potential to $404 per share based on a discounted cash flow analysis forecast at this time, suggesting the correction might well be overdone and bargain hunters can start nibble on purchases again.
The Bottom Line: Should You Scoop Up These Stocks?
It’s important to remember that, in order to be required to file a Form 13F, you have to have over $100 million in total assets. This is a whole lot of money, to be sure, and it indicates that these investors have plenty of money to spend and are more than willing to take a risk with it — after all, there’s always more to spend when you have that kind of money. It’s worth keeping this in mind as you consider investing in any one of these stocks rich investors are scooping up.
The author has no position in any of the stocks mentioned. Financhill has a disclosure policy. This post may contain affiliate links or links from our sponsors.