9 Stocks Super Investors are Buying! (2023)

So, I'm about to let you in on one of the biggest secrets when it comes to investing. Listen closely because this advice could help you make a ton of money.

If you want to know what stocks you should be buying, pay attention to what great investors are purchasing in their own portfolios. Investors like Warren Buffett, Charlie Munger, Monish Pabrai, Bill Ackman—the list goes on and on. These are some of the best minds in the world when it comes to investing; they have literally dedicated their lives to finding undervalued securities.

Naturally, looking at what these guys are buying is a good place to start for your own portfolio. Here's a list of nine stocks the so-called super investors have been buying recently. Number five on the list is my personal favorite, so make sure to stick around to the end of this video because you may just find your next great investment idea.

Number nine on the list is Charles Schwab, ticker symbol S-C-H-W. Charles Schwab has a market cap of around 100 billion dollars and trades at a P/E ratio of 13.9 times. The company did 22.3 billion dollars in revenue this past year, with 7.4 billion in profit. Charles Schwab is a financial services company that offers banking, brokerage, and wealth management services to both retail and institutional clients.

Charles Schwab has actually been in the news a lot this year. In March 2023, a regional bank known as Silicon Valley Bank collapsed. Investors got weary of Charles Schwab over fears that it would soon collapse as well, and this sent the share price tumbling. Shares in the company fell by a whopping 30 percent in just one day. The concern from investors was that people would pull their money from Schwab, causing a de facto run on this financial services company.

You see, a big part of Schwab's business model is relying on people leaving cash in their accounts. The company automatically "sweeps" customer cash deposits into bank accounts and invests that money in safe investments. However, instead of giving the profits from those investments back to the client, Schwab keeps that money. Well, the problem is, as interest rates rose and customers could get a return on their cash from having it in something like a high-yield savings account, customers pulled their cash in droves. This significantly impacted Schwab's profitability and explains why the stock price hasn't come close to recovering.

Number eight on this list is Bank of America, ticker symbol BAC. Bank of America has a market cap of around 233 billion dollars and trades at a P/E ratio of 8.5 times. The company did 115.1 billion dollars in revenue this past year, with 27.5 billion in profit. Bank of America is one of the world's largest financial institutions. The bank's services range anywhere from providing simple tracking accounts for individuals all the way to complex banking products for large multinational companies and everything in between.

The banking business model is simple: banks take in money from customers, and this money is referred to as deposits. This is the extra money you have sitting in your checking account. The bank may pay you something like 0.01 interest for the extra money you have. The bank then turns around and loans that money out at six, seven, even eight percent or even more. The bank's profit is the spread, aka the difference between what they pay depositors and what they then charge to people and businesses to borrow that money.

While this business model does seem pretty simple, things can get messy quickly if the bank doesn't get paid back. As a quick aside, Warren Buffett and his company, Berkshire Hathaway, own roughly 10 percent of Bank of America. This makes Berkshire the largest shareholder in the company.

Number seven on the list is Capital One, ticker symbol COF. Capital One has a market cap of around 43 billion dollars and trades at a P/E ratio of 7.7 times. The company did 38.4 billion dollars in revenue this past year, with 7.4 billion in profit. Capital One offers credit and debit card products, auto loans, and other consumer lending products. It operates through three business segments: credit card, consumer banking, and commercial banking.

The company's credit card business is its largest segment, accounting for roughly 65 percent of revenue. This segment provides credit cards to both individuals and small businesses; credit cards are what Capital One is known for. Capital One also has a consumer banking segment, which accounts for approximately 25 percent of revenue. This segment is the one that's most like a traditional bank, taking in deposits from customers and making loans to people and businesses. Here, Capital One is a big player in U.S. auto lending, providing loans for people to buy vehicles. The third segment is commercial banking, and this segment offers various banking services to larger businesses and commercial real estate; this segment generates about 10 percent of Capital One's revenue.

Capital One stock is down nearly 40 percent from its peak in August 2021, and this has to do with concerns about the economy. As a credit card company, Capital One is at risk when the economy slows. With its credit card product, Capital One is essentially providing short-term loans to people and hoping to get paid back. When a customer fails to pay back Capital One, they're out of luck; the money the company was owed is gone. This lost money is what is referred to as a charge-off.

Charge-offs are just part of being a credit card company. Even in a strong economy, they happen. Capital One plans for that accordingly; however, when the economy slows, charge-offs increase. This can put significant pressure on Capital One's profits. Look at Capital One's most recent quarterly earnings results, and you can see just how dramatically these charge-offs are increasing. Charge-offs rose from 2.18 of all loans in 2021 all the way to 4.06 percent this year—that is nearly double.

The concern is that this charge-off number will go from four percent to six percent to eight percent to ten percent and even higher. This would put significant pressure on the company. Despite the short-term headwinds, our list of super investors like this pullback in Capital One stock and made the company one of the most bought stocks among our group of investors.

This video is about what stocks billionaire investors are buying; however, there is another investment class that billionaires are interested in. Whether it is billionaire investor and founder of Citadel Ken Griffin or Steve Cohen, owner of the Mets baseball team and founder of the hedge fund 0.72, these are just two of the names that stand out. But hedge fund founders and owners love this asset class.

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Now, back to the list. Number six on the list is Salesforce, ticker symbol CRM. Salesforce has a market cap of around 209 billion dollars and trades at a forward P/E ratio of 26.9 times. The company did 32.2 billion in revenue over the past 12 months, with 379 million in profit. Salesforce is the leading CRM software company. CRM stands for Customer Relationship Management. CRM is a technology for managing all of a company's relationships and interactions with customers and potential customers. A CRM system helps companies stay connected to customers, streamline processes, and improve profitability.

Over the past decade or so, Salesforce was like many tech companies that had a "grow at all costs" mentality. The company was focused on growth rather than profitability. This mindset reached a peak when Salesforce paid a whopping 27.7 billion dollars to acquire workplace collaboration company Slack. Investors and Wall Street believed Salesforce paid too much for the acquisition, giving the increase in competition Slack faced from Microsoft. The combination of Salesforce being both a great business and having a bloated cost structure made it a perfect target for so-called activist investors.

Activist investors have a pretty straightforward business model. They find a company that they believe is fundamentally strong but is not being managed properly. The activist then buys a large stake in the company and then agitates management to make the changes they want. Ideally, the company implements those changes, and the company becomes more profitable. The stock price increases, and the activist fund sells the shares for a hefty profit.

Salesforce became a target for the who's who of activist funds—funds such as Third Point, ValueAct, Elliott Management, and Starboard Value all took sizable positions in the stock. These funds sure seemed to get management's attention. Recently, management has become much more focused on cost control and profitability, even going as far as to announce some pretty significant employee layoffs in an effort to rein in costs. This got the attention of our list of super investors, who made Salesforce one of their most bought stocks.

Number five on the list is Intuit, ticker symbol INTU. Intuit has a market cap of around 120 billion and trades at a forward P/E ratio of 29.3 times. The company did 12.7 billion dollars in revenue the past year, with 2.1 billion in profit. Intuit is a business software company that specializes in financial software. While you may not have heard of Intuit, there is a good chance you've heard of at least one of the various software products the company owns.

Intuit has four segments. The first is small business and self-employed, accounting for about 50 percent of revenue. This segment serves small businesses, self-employed individuals, and the accounting professionals who assist them. The segment consists of the company's QuickBooks accounting software and its email marketing tool MailChimp. The consumer segment accounts for roughly 35 percent of revenue and consists of the tax preparation software TurboTax. The personal finance platform Mint is also in this segment. The product Credit Karma is its own segment at about 10 percent of total company revenue. Credit Karma is a personal finance platform that provides personalized recommendations for credit card, home, auto, and personal loans. The fourth segment is tiny, at just five percent of total revenue, and is called ProConnect. This segment serves professional accountants in the U.S. and Canada.

Intuit stock is down approximately 35 percent from its peak in November 2021, due in large part to economic concerns. A big driver of Intuit's business is small businesses. When the economy slows down, it's not usually the large billion-dollar companies that go out of business; it is small businesses that get hit the most. These so-called mom-and-pop businesses are the ones that use Intuit's small business accounting software. When one of these small businesses goes under, well, that's a customer that Intuit just lost.

Our list of super investors are looking past the short-term economic uncertainty, making Intuit one of the most bought stocks by our group of super investors. Number four on the list is Meta, formerly known as Facebook, ticker symbol M-E-T-A. Meta has a market cap of around 679 billion dollars and trades at a P/E ratio of 19.1 times. The company did 116.6 billion dollars in revenue the past year, with 23.2 billion in profit. Meta has billions of users through its Facebook, Instagram, and WhatsApp platforms. At its core, Meta is in the digital advertising business with a fairly simple business model.

When someone is scrolling on Facebook or Instagram, every so often, an ad will appear on their screen. Advertisers pay money to Meta in order to get the advertisement placed in front of you. Each time you see an ad is what is referred to in the advertising industry as a so-called impression. Just think of an impression as another word for a review of that particular ad. Advertisers buy these ad views in groups of 1,000. The cost per 1,000 impressions is the CPM, or cost per mille. Mille is Latin for thousand. The success of Meta's advertising business is really driven by two factors: the number of ads it can show users, or the impressions, and then the rate it can charge advertisers for every thousand of those impressions, or the CPM.

This is why it is Meta's goal to have you use Facebook or Instagram as long as possible. The longer someone is on the social media platform, the more ads that can be shown. On the other side of the equation, Meta wants to get as many companies advertising as possible. The more companies that are competing for ad spots, the higher the CPM. As the average customer spends more time online, companies have shifted their advertising spend away from TV, print, and radio to digital advertising. This has put significant upward pressure on CPM rates—a huge tailwind for the social media companies.

Meta's stock fell nearly 80 percent from its peak in 2021 to its bottom in 2022 on concerns about competition and the company spending too much money on virtual reality. Since then, competition concerns have eased, and the company has reigned in costs. As a result, the shares have skyrocketed over 200 percent since the bottom in November 2022.

Our list of super investors must believe this rally in the stock can continue, as they made Meta one of the most purchased stocks this past quarter. Given that the top three stocks on our list are household names, we're going to hit on those pretty quickly. Number three on the list is Microsoft, ticker symbol MSFT. Microsoft has a market cap of around 2.4 trillion dollars and trades at a P/E ratio of 36.5 times. The company did 198.3 billion dollars in revenue the past year, with 72.7 billion in profit. As of the making of this video, Microsoft is the second largest company in the entire world based on market cap; only Apple is bigger. Microsoft stock is up over 40 percent so far this year, causing the company to recently be able to pass Saudi Arabian Oil Company, Saudi Aramco, on the list of the world's largest companies.

Number two on the list is Amazon, ticker symbol AMZN. Amazon has a market cap of around 1.3 trillion dollars and trades at a forward P/E ratio of 39.4 times. The company did 514 billion in revenue this past year, with negative 2.7 billion in profit. Amazon is the world's largest e-commerce company. The company experienced a boom in 2020 and 2021 as everyone was ordering products online. Things started to change as the world reopened; Amazon prepared for this elevated demand to continue, but e-commerce demand started to normalize. The company was caught flat-footed, having invested billions to prepare for growth that never materialized. Amazon's stock price is still down over 30 percent from its peak but has started to recover some of its lost ground this year.

Now, drum roll please, for number one on our list: the most bought stock from our group of super investors is Alphabet, ticker symbol G-O-O-G-L. Alphabet has a market cap of around 1.5 trillion dollars and trades at a P/E ratio of 25.5 times. The company did 282.8 billion in revenue the past year, with 60 billion in profit. For those of you who may not be familiar, Alphabet is the holding company of Google and YouTube. Alphabet's main business is digital advertising. A major portion of its revenue is dependent on companies spending money on advertising. When businesses are worried about the economy, they pull back on advertising, and this puts pressure on Alphabet's stock, sending it down over 40 percent from its peak.

At one point, it looked like our list of super investors used this as a buying opportunity, propelling Alphabet to the number one spot on our list of most bought stocks.

So, there you have it. Make sure to subscribe to the channel because it's my goal to make you a better investor by studying the world's greatest investors. Talk to you again soon.