10 Stocks the Smart Money is Buying Right Now

[Music] Hey guys and welcome to the first video of the new money advent calendar! Whoa, what a big project! I am actually pretty nervous about this. I'm going to try and—no, I am going to do 25 videos in 25 days in the lead up to Christmas. So, uh, I hope you guys enjoy what we've got coming up on the channel.

I've got a stack of YouTubers that are going to come onto the channel, which is going to be awesome, and I want to hear from you guys. What would you like to hear? Because this is like your time off; that's getting towards the holidays, you know? I want to make the content that you guys want to see. So, I'm going to do lots of Q&A style videos. Any questions you have, leave them in the comments. Any video ideas, definitely put down your suggestions, leave them in the comments, and let's get this show on the road.

Hey, I hope I can hold your attention for 25 days straight! So anyway, let's get into it! So here we go, and first up, I've actually got a pretty cool video to share with you guys today. The video all revolves around the idea of 13F filings. So, if you don't know what a 13F filing is, it is essentially a quarterly document filed with the SEC by all the world's big money managers—or in the States anyway—and it gives us an insight into their share portfolio.

So officially, the Investopedia definition is: "The 13F form is a quarterly report that is required to be filed by all institutional investment managers with at least 100 million in assets under management. It discloses their equity holdings and can provide some insights into what the smart money is doing in the market." So it's very handy for us for sure because essentially, they release their 13Fs, which show you what they’re holding in their portfolio at the current time. Then you can compare that to 13Fs in the past to see whether those positions have gotten bigger or smaller, so whether they’ve been buying or selling.

Now, in reality, you don't actually have to do that step because a lot of websites these days automatically update that for you. So websites like GuruFocus, but the one I'm going to show you and talk about today is a website called Data Roamer because they track 69 of the world's best investors, and they follow their 13F filings from quarter to quarter.

In this video, what we're going to look at is all of those super investors lumped together; what have they been buying and selling in Q3 2020. And we're actually going to start with the top 10 stocks that are held by the institutional investors, these big money managers, and then we'll move on to what they’ve—the top 10 stocks that they've been buying in Q3 specifically.

So first up, have a guess what the most owned stock is by these 69 super investors. Just have a guess! What's the most owned stock? Gotcha? Guess it's Facebook! 29 of the 69 super investors own Facebook in their portfolios, which is staggering. It takes up 2.3 percent of the super investors’ total portfolio and I'm totally not surprised by this.

Obviously, it's a massive moat company with their network effect. The management team is fantastic; they keep their debts really low. It's obviously a money printing machine because they're in digital advertising. So I'm definitely not surprised that this is the most held stock.

Then number two and three are Facebook's most close, you know, digital advertising competitor, and that is of course Google. So, obviously another massive moat company. The management team of Google just does a superb job as well. They keep basically no debt; they're a cash printing machine. They've got a really high return on invested capital of about 18 each and every year. So I'm definitely not surprised that Google takes up number two and number three. And remember, the reason it's in both of those slots is just because of the different classes of shares.

But now moving on into the fourth most owned stock. The fourth most owned is Wells Fargo, which is obviously one of the big U.S. banks. I think it's America’s fourth largest bank. So obviously, it's been in hot water in recent years. Obviously, the management have been called out for doing some dodgy things—the old fake account scandal—that was all the way back in 2016. But I mean, Wells Fargo has been hit particularly hard this year, so I'm not surprised that a lot of these super investors have been buying into Wells Fargo, as it now presents—I think it's like the cheapest it's been since 2011. So it's a good opportunity to get into one of America's big banks if you want to hold it for the long term. Obviously, the banks aren't going anywhere, so that's number four.

Then fifth is Bank of America. So continuing on the bank trend, this bank is Warren Buffett's favorite bank to hold. He's actually selling most of his positions in the bank stocks at the moment, except for Bank of America, where he continues to add to his position. He added 10% to it in Q3.

Definitely, they've got Warren Buffett behind them and a lot of other investors as well, held by 22 of the 69 super investors, occupying 1.88% of the total super investor portfolio. Then sixth is Microsoft, the biggest player in the S&P 500 as of today. It's obviously a massive software company owned by 21 of the 69 super investors.

Then seventh is Berkshire Hathaway. I'm not surprised that a lot of people—many of these super investors are invested in Warren Buffett's company. Obviously, by investing in Berkshire Hathaway, you also get a lot of diversification. You obviously get into the insurance business, you get into railroads, and trucking, and energy. But you also get access to their big share portfolio, which has a lot of Apple stock in it, you know, Bank of America and so on. So I'm not surprised that a lot of the top investors managing a lot of money also have bets on, first of all, the world’s best investor in Warren Buffett, but also on Berkshire Hathaway, which is such a powerful, diversified company in its own right.

Then moving on to number eight, the eighth most owned stock by these 69 super investors is Comcast. So Comcast is a diversified American telecommunications and entertainment company. It's kind of like Disney in a lot of ways, but it's a little bit different. For example, it's the largest pay TV company, the largest cable TV company, the largest home internet service provider. So from Xfinity to NBC Universal, Sky, obviously Universal Pictures, DreamWorks Animation, Peacock, Universal Parks and Resorts—Comcast is one of those big media, entertainment, telecommunications conglomerates. So it's not surprising that a lot of the super investors managing a lot of money are in this one as well.

And then moving on into number nine, the ninth most held stock by super investors is JP Morgan, which is another big U.S. bank. And then coming in 10th is again Berkshire Hathaway, this time the class A shares instead of the class B shares.

So in all honesty, the top 10 most held stocks by these super investors totally does not surprise me. Of course, they’re going to be in the big behemoth growth companies of the world like the Facebooks and the Googles. Yes, they’re going to be in, you know, the U.S. financials and yes, they're going to be in those big, kind of diversified, really strong companies that are conglomerates like, you know, the Berkshire Hathaways and the Comcasts and whatnot.

So totally not surprised that these are the top 10 most held stocks. Now let's move on into the top 10 most bought stocks in Q3 of 2020, and let's start at number 10. Number 10, we have Western Digital. So they took a hit around about March, like everyone else, but the difference here is they didn’t really bounce back.

So a lot of these super investors—I think four of the super investors decided to buy into Western Digital, including Michael Burry. They are of course the big American hard drive manufacturer and they're also a data storage company. So obviously, I think that's a pretty good business to be in over the next 10 years or so—really anything to do with computers. So I'm not surprised that this one creeps into the number 10 slot.

And then number nine is Berkshire Hathaway. So Warren Buffett's company, obviously again bought by four of the 69 super investors in Q3 of 2020. Interestingly, there was an 18% addition to Berkshire Hathaway from the Bill & Melinda Gates Foundation's portfolio. However, I'm not sure if Bill—or I can't remember the manager of his portfolio—I'm not sure if they were just buying him because they thought that Berkshire Hathaway was cheap, or I'm not sure if this was actually an addition from a donation of shares that came from Warren Buffett. Because, of course, Warren Buffett donates a lot of B shares of Berkshire Hathaway to various charities and organizations that he cares about, so it could have been that.

But I'm not surprised to have Berkshire Hathaway on this list of most bought. I'm surprised that it's number nine; I thought it would have been higher because interestingly, Warren Buffett himself—the guy with the most information out of anyone about Berkshire Hathaway—he bought nine billion dollars' worth of Berkshire Hathaway stock in Q3. So if the man behind the curtain is buying a lot of his own stock, then generally speaking it means that, well, in Warren Buffett’s case, it definitely means that he believes Berkshire Hathaway stock was definitely undervalued during Q3.

Anyway, moving on from number nine now. Number eight, the eighth most bought stock from the super investors is PG&E, which is a big American utility company. Another one that stayed fairly flat after the March stock market crash that we saw, which gave four out of the 69 super investors a good opportunity to pick up some shares in PG&E around about the nine-dollar range, including Seth Klarman. So there you go.

Then moving on, seventh most bought stock was Bank of America. As we were saying before, big U.S. bank—Warren Buffett's favorite bank investment at the moment—as evidenced by him adding 9, 9, 10% to his position in Bank of America in Q3. But three other of these super investors also added, and obviously they got a good opportunity to add to Bank of America in Q3 as the stock price stayed relatively flat over that period of time after the March crash.

So that’s the seventh most bought stock in Q3. Moving on to number six, we have Intel. So Intel, of course, is the big chip manufacturer known for making microprocessors for companies like Apple, Lenovo, HP, Dell—all of their products. Well, I shouldn't say all; a lot of their products do feature Intel chips in them or Intel microprocessors.

Interestingly though, for Intel, this company actually rebounded all the way back after the March stock market crash that we saw. However, they actually crashed 20% back in July, and that dragged the stock back down to its previous low. That 20% dip essentially gave the super investors a good two months to start, you know, building positions in Intel, and obviously a few of them did. But what's interestingly, even more recently, is that Intel has had another 20% taken off of its share price. So I would imagine what we would see in the Q4 13Fs when they come out next year—I wouldn't be surprised if we saw the same investors that were adding or buying Intel stock in Q3 to also be adding or buying in Q4.

Because hey, at the end of the day, they obviously like the company; they’re getting an even better price now to buy the shares at. Then moving on into the fifth slot, we can see Microsoft. So again, Microsoft—no surprise—it’s the largest company in the S&P 500 right now, and it is just a behemoth company.

They've got a massive moat with the various elements of proprietary software that they've got. They've got a fantastic management team that keeps a rock-solid balance sheet; they've got heaps of cash, relatively speaking, they've got quite low debt when you compare it to their cash flows. So, I'm definitely not surprised. But interestingly, this stock was definitely not one that stayed depressed after the March stock market crash. In fact, it's gained all of that lost territory plus some.

So obviously, despite what the stock price chart looks like, a lot of these super investors still found that there was significant potential in Microsoft stock for the long term, even at investing in these current prices. So definitely not surprised to see Microsoft here on the list. It’s just a behemoth—it's a fantastic, very well-managed company with a great moat. Yeah, I'm not surprised that a lot of the world’s best investors have invested or are continuing to invest in Microsoft.

Alright, moving on into the fourth most bought stock in Q3 of 2020, we hit CVS Health. And this is an interesting one because personally, I had really no idea of what CVS Health did, and I'm still not 100% confident that I understand their business. But from what I understand of it, it seems that CVS Health owns and runs pharmacies. They are also a pharmacy benefits manager, and they're also a health insurance provider. But anyway, this is another one of those companies that suffered in March and just didn't really rebound; it stayed relatively flat.

Interestingly now, in recent times, it's bounced up about 20%. So, fair to say I think the five super investors that bought into this company have certainly made money on their position over the last little while. So that is CVS Health.

And then moving on into the third most bought stock in Q3 of 2020, it is Micron Technology. So Micron, you probably know of this one—well, I know of this one because it is Monash Pabring’s largest investment. I think it takes up like literally over half of his portfolio, which is insane! But it was also bought by Seth Klarman in Q3 of 2020, and it's also owned by Guy Spier, so some big names there for sure.

Now, Micron is the big American manufacturer of computer memory and computer data storage, including RAM, flash memory, USB drives. So these super investors would have gotten a great opportunity to get into the stock and load up on shares during September because in September, the stock cooled off 20%, so it's down to $42 at one point. So I imagine there would have been a fair bit of buying by super investors around that time. However, what's really interesting is that in recent times, just in November, the stock has bounced up 30%.

So these investors, if they got in after the stock cooled off 20%, they would definitely be in the black; they would be making money right now. So that's the third most bought stock for Q3 2020.

The second most bought stock is Facebook! So again, no surprises here. Even though, you know, the share price is not particularly, you know, hampered, still obviously I would definitely expect a lot of the super investors to be buying Facebook stock, especially if they're long-term focused. Obviously, Facebook, like we were talking about before, just a big, big moat company. Big network effect; the management team does a great job. No debt—a cash printing machine, amazing cash flows. So I'm definitely not surprised that investors continue to buy into Facebook. Even though since its March lows now, it's bounced up 90%.

90%! Since March—that is really impressive performance. But also at the same time, it's not outrageously expensive. Like, I think you look at Tesla and look at the PE ratio on Tesla—it's just disgusting! But you look at a company like Facebook, and it's still around the 30, 32 range, which is kind of what Facebook is normally at. So it's not horrifically overvalued, Facebook. So I'm not surprised to see investors still buying into Facebook. No debt, you know, big cash pile, massive cash flows, really rock-solid business, well managed, high return on invested capital.

So Facebook is—it’s a stock! It's a stock! Anyway, now let's look at coming in at number one. The most bought stock by the super investors in Q3 of 2020 was Wells Fargo. So interesting, from the start of the year to the start of Q3, Wells Fargo stock had dropped by 53%. In fact, right now, its share price is at levels not seen since 2011, right?

So when we just look at share price—obviously not talking about valuation—but when we just look at the share price, we haven’t seen the share price in a very long time. So I'm not surprised that a lot of super investors are taking the time to get into Wells Fargo. It kind of makes sense. Obviously, it's a big U.S. bank, so I don’t think that it's going to go anywhere— not that I really look into the banking industry very much.

But I think it's also, obviously, it's been hampered over previous years after the big management scandal, which is—they're kind of just getting to the bottom of all of that now, even though it happened back in 2016 where the management team lied to investors about, you know, account growth, when in fact, the accounts they were making were fake. But yeah, I'm not surprised because they’re kind of getting all that sorted out, getting rid of all the managers that were kind of a part of that, you know, terrible scheme ploy to kind of pump their business or make their business look better.

So I'm definitely not surprised that, you know, investors are seeing this massive drop-off in share price. It's a big U.S. financial—it's really not going anywhere. They've been hit with bad news, but hopefully, they're getting to the bottom of that stuff. So I'm not surprised that a lot of super investors are buying in.

So overall, they are the top 10 stocks being bought by the 69 super investors that Data Roamer tracks from quarter to quarter. Now, does this mean that we should just go out and buy into these top 10 companies? Well, definitely not! It's very handy information for us to have, but we shouldn't blindly invest in anything that we don’t understand. But I think the best thing to take away from this video is it gives you a great starting point.

Now you can see what are the big money managers holding, what are they buying right now, and that should give you some ideas where you can then go in and maybe research a little bit further, understand the business—maybe if one pops up that's around your circle of competence, like a Facebook or something, if you're really interested in that sort of stuff, then this is the trigger where you go, “Oh okay, a lot of big investors hold it; a lot of very smart money managers hold it; you know, a lot of them have been buying it.”

Let's not buy the stock just because they're buying it, but let's go do my research, do the valuations, see why they might all be buying into this company. That’s the way I would approach having this information.

But anyway, guys, that is the first video done for the new money advent calendar, episode one, first of December. Thanks very much for watching! Leave a like on the video if you did enjoy it. And, uh, here’s the scary thing: I'll see you tomorrow, and the day after that, and the day after that, and the day after that, and the day after that, and the day after that.

Wow, this is going to be some effort, but I'm up for it, so let's go! Anyway, thanks very much for watching, guys! If you're interested in looking at how I go about my investing, my own personal investing strategy, passive and active investing, check out Profitful. Links are down in the description below. But that'll do me for today, guys. Thanks very much for watching, and I'll see you guys in the next video.

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