10 Stocks the Smart Money is Buying for 2021

[Music] Hey guys, welcome back to the channel! In this video, we're going to be talking about the top 10 most bought stocks by the big investors of the world as we lead into 2021. You might ask, "Well, how the hell do you know that, Brandon?" And the reason is because, of course, the big money managers over in the states have to each quarter release a 13F filing showing what is in their stock portfolio. We can look from 13F filing from quarter after quarter and figure out what they're buying and what they're selling.

But the reason I know what they are collectively all doing as a trend is because I follow a website called Data Roma, which tracks 69 of the largest investors in the world and actually tabulates all of that data for me. So I can actually see from Q4 2020, as we lead into 2021, what the super investors were holding and what they were buying en masse. That's what we're going to be talking about in this video.

So let's start out with the top 10 most held stocks by these super investors, and then later on, we'll talk about the top 10 most bought stocks in Q4 of 2020 that investors were buying for 2021.

If we start with the most held stock from these super investors, it's actually Facebook. 29% of the super investors hold Facebook in their portfolio. Facebook's obviously a very large moat company. I actually worked out, me and Hamish on the podcast the other day, figured out that of all the people who have access to the internet here on planet Earth, about 75% of them log into at least one of Facebook's apps every single month. Their apps being, of course, Facebook, Instagram, WhatsApp, or Messenger. So a big behemoth tech company—I'm not surprised that this is the most held stock from the super investors.

Number two is then Google. This one is held by 27% of the 69 super investors. Another large moat company, obviously, with Google Search. They own YouTube; they also have their own cloud business. There’s a lot to like about Google heading forward, and they're a big company, but their growth is still really impressive. So I’m not surprised at all that the super investors hold Google.

Then number three on the list is actually Wells Fargo, which is one of the big US banks. Now, Wells Fargo is held by 25% of the super investors. I think the reason behind this is mainly due to the value proposition because, of course, Wells Fargo, like all stocks really in 2020, around March, it got absolutely pummeled. Like, it got destroyed just like everything else did. However, everything else just seemed to bounce back up to us, you know, and now most stocks are at record highs. Wells Fargo stayed quite depressed for a very long time. So I feel as though a lot of these super investors just saw Wells Fargo as a bit of a value play, and it's a value play that would have turned out pretty well so far because it's now starting to rebound quite considerably.

But I don't think the super investors particularly like Wells Fargo a million times more than say some other banks. I just think it's probably the one that offered them perhaps the best buying opportunity. But who knows? I’m certainly no expert in banks.

Anyway, moving on to number four, the fourth most held stock by these super investors is, guess what? Google! Except this time it is the Class C shares. So we'll move straight along into the fifth most held stock, which is Bank of America. Bank of America is held by 21% of the 69 super investors, and it's, of course, Warren Buffett’s favorite bank—well, certainly the bank that has the largest position in Berkshire Hathaway's portfolio. About 11.3%, yeah, 11.3% of Berkshire Hathaway's portfolio is tied up in Bank of America.

Then sixth on the list is Microsoft. Microsoft is held by 20% of the super investors. Of course, it's another big, big moat company—it's also one of the biggest companies in the world—but is still producing some pretty decent growth, like a lot of these big behemoth tech companies in the US. Massive companies but still growing really well. In fact, currently, it occupies 5.3% of the S&P 500. So Microsoft is a monster company, but they're still growing really well. I think that's probably why a lot of super investors are in Microsoft, because of that continued ongoing growth. It's also an extremely consistent performer.

Then seventh on the list, we have Comcast, which is held by 20% of the super investors. This is obviously a large American diversified telecommunications and entertainment company. It's actually the world's largest cable TV company. It's the largest home internet service provider. It's the largest pay TV company, and it's the third largest home phone provider.

Then slotting in at number eight is Berkshire Hathaway, of course Warren Buffett's incredibly successful conglomerate, which in terms of their wholly owned businesses focuses on insurance, railroad, and energy. But, of course, buying into Berkshire Hathaway, you also buy into their stock portfolio, which has big names like Apple, Bank of America, Coca-Cola, American Express, and so on.

Then coming in at number nine, we've got Amazon, which is, of course, I don't need to tell any of you guys, is the big U.S. online retailer. And then coming in at number ten is Mastercard. So Mastercard, another big fat moat company along with Visa.

So there you have it! They are the most held stocks by the super investors. If you ask me, I think this is pretty predictable, this mix. I mean, you've got some of the really large financial companies in there. You've got some diversified conglomerates that still show promise into the future. And then, apart from that, you've got the really big moat companies, you know, the Googles, the Facebooks, the Microsofts in there, which I think makes sense. They're really big companies that are very well managed. They've got massive moats, but they're still growing quite, quite incredibly, if you ask me.

So I definitely don't think this is a crazy mix of companies to be seen in the top ten. Makes sense to me. But then the next thing I wanted to look at is, okay, so they're the top 10 most held stocks, but what are the top 10 stocks that these investors were buying into as we led into 2021?

So during Q4 2020, what were the top 10 most bought stocks? Coming in at number 10 is Exxon Mobil. Now, Exxon Mobil was bought by five of these super investors during the quarter, and it's actually the seventh largest oil company in the whole world. Now, I'm the first to put my hand up and say I don't know very much about oil companies because it's just totally outside my circle of competence. It's not something I ever looked to invest in, but I would probably imagine that the investors buying into Exxon Mobil during Q4 2020 were doing so as a bit of a value play, because if you actually have a look, the shares got down to $31.57 in October, and that's actually cheaper than where Exxon Mobil was in March at the height of the crash due to the lockdown, due to the pandemics. So, I think a lot of investors treat it as a value play, and to be honest, it's done very well because year-to-date it's already up 30%. So those investors have certainly done very well.

Anyway, moving on, the ninth most bought stock in Q4 2020 was UNH—United Health Group. So United Health Group was actually reasonably flat in Q4 2020, which just leads me to believe that the investors buying in, they weren't necessarily buying because of a dip; they just really liked the business and were willing to pay the price that it was, even just as it stayed normal. You know, so if you don't know, United Health essentially makes healthcare products and offers insurance services. In 2020, it was actually the second-largest healthcare company by revenue and the largest insurance company by net premiums. So definitely, United had a strong 2020. Maybe that tempted some of these investors into buying the shares.

Anyway, moving on into the eighth most bought stock in the quarter, it was Bank of America. The share price was trending up towards the end of last year, but it's a good thing that it didn't worry these super investors out because again, this is another one where it's already up 15.5% in 2021 alone, the short amount of time that we've actually had in 2021. That's an insane return to get in like two months. But I don't know, we've kind of been conditioned to just feel like that’s getting relatively normal these days, which is definitely not normal, but it’s just bizarre, very, very strange times in the market.

Anyway, moving on into the seventh most bought stock, it was Goldman Sachs. So another big U.S. investment bank. This one was also bought by five of the super investors last quarter. So exact same story as Bank of America—the shares have continued to surge in 2021. In fact, it's even a little bit better for Goldman Sachs. The shares have gone up 20% year-to-date, so even better than Bank of America.

Then sixth on the list is Comcast. As we were saying before, a big American diversified telecommunications and entertainment company. Interestingly, the shares drifted down to $41 in Q4 of 2020, I guess enough to pique the interest of five of the super investors.

Then moving on, number five, the fifth most bought stock by these super investors in Q4 2020 was Alibaba. So Alibaba, as we know, is like the Amazon of China. If you actually have a look from March all the way through to the end of October in 2020, shares were just trending up, trending up, trending up, and that actually dropped 24% to the end of the year. That was as a result of regulators in Beijing pausing the $35 billion IPO of the Ant Group, and they also launched an anti-trust investigation into Alibaba. But for five of the super investors, they simply saw this as a buying opportunity, and they got in during Q4 of 2020 on Alibaba.

Then, if we move on to the fourth most bought stock, this one is Merck—Merck & Co. So this is an American multinational pharmaceutical company. It's one of the world's largest pharmaceutical companies. In fact, according to Wikipedia, so take that for what it's worth, the company is the seventh largest pharmaceutical company by market cap and revenue. Warren Buffett, he's also a fan of this one. He actually bought Merck in Q3 of 2020 and he added 28% to that position in Q4. So another five super investors thought that Merck was a pretty good deal and jumped on board, so they added or bought this stock in Q4.

So moving on, then the third most bought stock in Q4 was Facebook. So Facebook actually traded pretty flat in Q4, which maybe to some of these investors looked like an opportunity because it was still coming out of some pretty good results. For example, coming out of Q3 last year, they showed 22% year-over-year growth in revenue and 29% year-over-year growth on their bottom line. Now one quarter later, Facebook has continued to post some very impressive results—33% year-over-year growth in revenue, 53% year-over-year growth in net income for Q4 2020. So it's a business that keeps showing up and keeps producing these fantastic growth numbers, but it's also one of these businesses that is not just wildly overvalued like you see in a lot of companies. I'm talking the Amazons and the Teslas and whatever. They've got these P ratios in the hundreds, if not Tesla in the thousands.

Whereas Facebook, while I still consider 25 as a P ratio to still be reasonably high, it's definitely not ridiculous. So with Facebook continuing to hover in kind of that $240 to $260 region, if there was buying happening in Q4 of 2020 by these super investors, I wouldn't be surprised to see continued buying—so even more buying by these super investors in Q1 of 2021.

Anyway, moving on into the second most bought company by these super investors in Q4 2020, it was Microsoft. So Microsoft again traded flat in Q4 in terms of stock price, and I can't find a particular reason why these super investors would have been flooding into Microsoft specifically in Q4. I think it's just a case of Microsoft being a really solid company. They're well managed, they produce great growth, and they're extremely consistent.

In fact, have a look at some of these statistics. I'll chuck a couple of these charts on screen. If we just have a look at the chart for say revenue growth or operating income or net income or cash flow, it's just incredibly consistent. Microsoft just shows up and basically continues to grow at that same rate year after year after year and have done so for a long time. So investors, you know, it's not always about finding the next big thing. Sometimes it's about just finding the thing that works and has worked for a long time and is going to continue to work for a long time and just placing your bets, you know, low-risk bets based on past performance. That’s a lot of investing.

So it doesn't surprise me at all to see a lot of investors continuing to buy Microsoft. I wouldn't be surprised if you look back year, you know, prior year, prior year, prior year. You probably would have seen continued buying as well because they just show really consistent numbers over time.

Anyway, that leads us to the number one most bought stock by the super investors in Q4 2020 as we headed into 2021. This company was Wells Fargo. So Wells Fargo was bought by 10% of the 69 super investors in Q4 of 2020 and is held by investors such as Michael Burry, Guy Spier, Charlie Munger, and Warren Buffett. Although admittedly, Buffett is slowly getting out of his Wells Fargo position. He doesn't really like the business anymore after everything that went on with the fake accounts scandal. I think that was a couple of years ago now.

But as we were talking about before, this is just an example of a big U.S. bank and one that was probably offering investors a decent deal. Of course, we were talking about how that share price dropped off in March but didn't really recover. It's only now, very recently, started to recover. So I have a feeling that just a lot of these great super investors just saw value in the stock at around those low levels and decided to buy in, and it is just starting to rebound. So it must have just enticed them at around that $21 range.

But overall, guys, they are the top 10 stocks that the super investors did buy into in Q4 2020. They're the ones that they wanted to buy leading into 2021, and I hope you enjoyed actually looking at the most held stocks as well.

Now, just want to say very quickly, what do we do with this information? Do we go out and buy these top 10 stocks because the super investors are buying them? Definitely not! Okay, I don't want this video to come across as these super investors bought these 10 stocks so you should too. That's definitely not what I'm about. Of course, you make your own decisions, whatever you want to do with your money, whatever stocks you want to buy—that's on you.

However, what I think is wise is, you know, we’ve got to use this information to our benefit, right? So what I think is wise is to have a look through these companies and maybe pick out the ones that fit within your circle of competence. And don’t just buy them, but use this as a bit of a guiding light as to maybe some companies that you might want to do some further research in.

So say you love banks; say you love financial companies like Warren Buffett does. Maybe you want to go and have a little bit more of a peek at Wells Fargo. Or maybe you like technology; maybe you want to go have a bit more of a look into Microsoft. That’s how really you should treat this information.

But overall, guys, I hope you really enjoyed the video. Leave a like on the video if you did enjoy it or if you found it useful. Subscribe to the channel if you have not done so already. And check out Profitful links down in the description below if you want to learn about how I go about my investing—basically investing principles that I've learned and apply that I've learned from, you know, these top investors that are included in this video.

So if you wanted to learn more about that, check out the links down in the description below. You're also helping out the channel if you choose to buy one of those courses over on Profitful, so I certainly do appreciate that. But that's it for today, guys! I hope you really enjoyed the video, and I'll see you guys in the next one. [Music] [Applause] [Music] [Applause] [Music] [Applause] foreign