What Stocks Are Billionaires Buying?

One of the most significant data releases of the final quarter of 2021 already happened. If you’re a newbie investor or a veteran investor looking to beef up your portfolio, listen up. February 15 was the filing deadline for fund managers managing more than $100 million in assets to file SEC Form 13F.

What is Form 13F?

Form 13F is a very insightful tool that all investors should be using. It gives investors a peek at what Wall Street’s brightest minds have been buying and selling.

The most recently released Form 13F details what billionaires and other highly successful investors bought and sold during the fourth quarter of 2021. The form is not without its downfalls — perhaps the biggest is that the snapshot they provide is 45+ days old. But, it still lets investors know which stocks are being snapped up and making the most money.

What we learned from Q4’s Form 13F is that those in charge of billionaire stock portfolios love growth stocks. 

Here are the top four growth stocks that billionaires couldn’t keep themselves from buying in the 4th quarter of 2021:

Airbnb (ABNB)

Two Sigma Investments’ John Overdeck and David Siegel added around 360,000 Airbnb shares in the fourth quarter, while Renaissance Technologies’ Jim Simons added nearly 814,000 shares.

Billionaires love Airbnb’s competitive edge over its rivals as well as its potential for sustained double-digit growth.

Interestingly, Airbnb is seeing the most significant growth in the long-term rental sphere (28+ days). In fact, since 2020, the average Airbnb stay has grown by 15%.

In Q4 2021, long-term stays accounted for 22% of all bookings on the platform. This comes after the pandemic-induced pivot to remote work. The rise of “digital nomads” means more people looking to take advantage of a nomad lifestyle where they live — and work and play — in different locations throughout the year.

The company is also looking to keep growing its Experiences segments through partnerships with restaurants and transportation, which we anticipate seeing in the near future.

Amazon (AMZN)

In Q4, Lone Pine Capital purchased around 256,000 Amazon shares. Citadel Advisors bought more than 234,000 shares — nearly quadrupling its position.

Amazon is growing like wildfire — nothing new there. But, the figures are still astounding. Analysts anticipated the e-commerce behemoth to make up more than 41% of all online spending in 2021. That’s a 100 basis point increase from 2020!

Adding fuel to Amazon’s growing fire is the 200 million+ Amazon Prime subscribers. The company uses the billions of dollars Prime subscribers bring in each year to buoy its retail margins that are already paper-thin. In turn, this helps the e-commerce giant offer its products at lower costs than its competitors. 

What’s more, Prime members spend significantly more than non-Prime members each year.

Amazon’s recipe to success doesn’t end there, though. There’s another ingredient in their secret sauce — and this ingredient is powerful.

Amazon Web Services (AWS) is responsible for nearly one-third of cloud infrastructure spending worldwide. Although that figure is already impressive on its own, it’s just the beginning. Cloud spending is still a relatively new concept, and it already has significantly higher margins than the retail side of the website.

For example, in 2021, Amazon Web Services contributed 75% of the company’s $24.9 billion operating income, despite accounting for a mere 13% of net sales.

But, it doesn’t end there. Analysts expect the company’s higher-margin segments to more than double Amazon’s operating cash flow within the next four years, including from:

• AWS
• Subscription services
• Advertising

With this kind of performance and growth, it’s easy to see why billionaires are rushing to pour their money into Amazon stock.

Visa (V)

The amount of money that billionaire investors poured into Visa in Q4 is astounding, including from Coatue Management, where investors added 2.25 million shares, and Viking Global, where investors added 1.33 million shares.

Why do investors love Visa so much? It dominates its market, and there’s great potential for global expansion.

In 2018, Visa controlled 53% of all credit card network purchase volume in the United States, the world’s leading market for consumption.

After the Great Recession, Visa was the only payment processor to expand its market share domestically considerably. It did so by nine percentage points over the course of nine years, from 2009 to 2018.

The large majority of global purchases are still transacted with cash, especially in underbanked areas, like Africa, Southeastern Asia, and the Middle East. These underbanked communities present a great opportunity for Visa to expand by reaching and acquiring new markets, merchants, and customers.

What’s more, cyclical ties also benefit Visa — when the U.S. and global economies grow, Visa does well. When recessions pop up, and consumers spend less, Visa does less well.

Visa is also protected by cyclical ties because, during periods when the world economy is strong, Visa reaps the benefits. When the economy faces a downturn, Visa performs less well. But, lucky for them, growth tends to last much longer than recession.

This allows them to bounce right back from any downturns while taking advantage of the long periods of economic expansion. Visa is only a payment processor and doesn’t do any lending, providing even more insulation.

Snowflake (SNOW)

Another stock that billionaire money managers could not stop investing in during Q4 was the cloud-data warehousing company Snowflake.

Money managers from Lone Pine Capital purchased nearly 1.65 million shares. Tiger Global Management snapped up close to 849,000 shares.

Why is Snowflake so popular among the world’s most successful investors? Its stark competitive advantage and differentiation in the cloud space and its superior growth rate. These are linked to the fact that Snowflake’s infrastructure is built on top of some of the world’s leading cloud services.

As you may have experienced firsthand, sharing cloud-stored data can be a near-impossible feat when people who use different cloud infrastructure providers try to exchange data. But, Snowflake allows users to access and share this data seamlessly.

While most cloud-oriented companies look to lock their customers into recurring subscriptions, Snowflake isn’t a huge proponent of the subscription-driven model. Instead, it charges customers based on how much data they store and how many Snowflake Compute Credits they used, giving their customers more control over their expenses.

But, the number one thing billionaire investors love about Snowflake is its supercharged growth rate. In FY 2022, Snowflake is expected to more than double its sales, followed by an expected growth of 67% in consensus revenue growth by 2023. By FY 2029, Snowflake expects to hit $10 billion in annual sales.

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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.