3 more billionaires are buying stocks now

Tom Yeung here with Sunday this week Digest.

Last week, we discussed the contrarian bets that billionaire investors often make. By looking beyond basic corporate labels, successful fund managers like Joel Greenblatt can often recognize overlooked opportunities, such as the Marriott “toxic waste” spin-off in the early 1990s.

As I said last week:

Over the next three years, the “bad” Marriott will divest its airports and toll road concessions, add 55 hotels to its portfolio, and complete the sale/leaseback of all Courtyard and Residence Inn hotels. By 1999, it had become the largest hotel real estate investment trust in the US (REIT).

These improvements also translated into share price gains. Within five months of the spin-off, Marriott’s “bad” stock had tripled, and the stock would rise another 80% by the end of the decade.

But billionaire investors can also make simple plays.

In the 1950s, money manager Philip Arthur Fisher became famous after investing in Motorola and publishing a book on growth investing. Morningstar has since called him “one of the great investors of all time.” And even historically contrarian investors like Bill Miller and Warren Buffett have shifted their strategy to buy popular growth stocks like Alphabet Inc. (GOOGLE) and Apple Inc. (AAPL).

As they say, investors don’t win points for style.

This week, I’ve been given permission to reveal three more stocks that our corporate partner’s quantitative system has flagged for investment. By analyzing and testing the trades of over two dozen top billionaire stock pickers, the TradeSmith team has built a robust system that finds some of the best companies to invest in, regardless of the labels investors put on them.

We call these stocks members of the “Billionaire’s Club”.

(Senior Analyst InvestorPlace Eric Fry recently talked about a different system than our corporate partner – a powerful tool that can help you determine the optimal time to sell your stocks before the next big crash – in the last video presentation. You can watch that here until September 30th.)

You’ll notice that these companies look like more “typical” buys than last week’s group. But don’t be fooled—all of these companies have the same quantitative reasons to be bullish. Billionaires buy stocks and have good reason to do so.

The self-driving winner

Earlier this month, Tesla Inc. (TSLA) CEO Elon Musk began promoting his company’s October 10 “Robotaxi” event.

“This is going to be one for the history books,” Musk posted on X on Wednesday, along with a photo announcing the event. Leaked renderings of the concept suggest the vehicle would be a futuristic two-seater without a steering wheel.

The electric vehicle pioneer has a lot going for it. Companies from Google subsidiary Waymo to General Motors Co. (GMCruise powered by ) have many more test miles under their belts. Waymo itself already offers taxi services in two different cities.

It’s important to note, however, that no matter who “wins” the race to build the first mass-market fully autonomous vehicle… one company is almost guaranteed to come out on top:

Uber Technologies Inc. (UBER).

The ride-hailing firm currently operates the largest network of third-party drivers in America. Those looking for taxi services can log into the app and access virtually every available driver in the area. Toyotas… Teslas… Fords… Uber doesn’t care what brand of car is on the road. If it’s the best machine available, it’s given the job.

This speed has helped Uber dominate the transportation market. Many urban users wait less than two minutes for a ride to appear. Even my relatively rural neighborhood averages a seven-minute wait to the delight of my guests.

This advantage will likely carry over to self-driving vehicles, especially if their owners will eventually be able to rent out their vehicles to provide rides. Third-party aggregators like Uber will be able to provide faster service than individual car companies, and history tells us that these online marketplaces can be successful even in relatively concentrated markets like airlines and hotels.

This is probably why Uber recently joined the Billionaire’s Club and receives a green zone recommendation from our corporate partner’s quantitative system. Shares of the carrier have rebounded well from a post-pandemic slump, and this latest secular tailwind could continue to send shares higher.

AI King

this month, Nvidia Corp. (NVDA) joins our Billionaire’s Stocks to Buy Club list while also earning a green zone recommendation.

I do not take this recommendation lightly. Nvidia stock has already tripled in a year, and there’s always the fear that “what goes up must come down.”

Still, I’ve long argued that Nvidia stock should hit a split-adjusted $160 by 2027. The company uses a proprietary standard known as CUDA to connect its chips together, so every bit of software optimized for Nvidia chips must be rewritten to run. on anything else.

We know this is an almost priceless moat. COBOL, a 60-year-old programming language, still dominates the banking industry because no one wants to rewrite code that already works. And CUDA will remain the gold standard even as rivals begin to catch up with Nvidia’s chips. There is simply too much AI code already written for the Nvidia system.

Additionally, a recent move by Apple into AI is a positive sign for Nvidia. Like InvestorPlace Louis Navellier writes in a recent 360 Square update:

Once again, AI chip leader NVIDIA Corporation will also benefit. In addition to the on-board AI capabilities, the iPhone 16s will send more complex queries to offsite data centers, where they will be processed by higher-powered chips. NVIDIA is the leader in this field, and the performance requirements of the iPhone will almost certainly channel Apple’s investment to this GPU manufacturer.

That means the best time to buy Nvidia was “yesterday”. In its most recent earnings release, Nvidia reported that revenue rose 122% to $30 billion, while earnings per share rose 151% thanks to voracious demand for its AI chips.

The next best time to buy Nvidia is “today.” The chipmaker is expected to post another 42% increase in revenue and profits in fiscal 2026, and its earnings power is expected to remain strong through the end of the decade.

While stocks will be volatile in the short term, billionaire investors are eyeing the long term.

The Dividend Aristocrat

Exxon Mobil Corp. (XOM) is one of the best integrated energy companies in the world. The firm has spent decades amassing a portfolio of cheap upstream assets and combined it with a strong downstream refining and chemicals business to add value. Analysts believe that Exxon can maintain its dividend even if the price of oil drops to 40 dollars per barrel.

Exxon is also investing wisely for the future. The company has focused its bets on some of the cheapest reserves available, particularly in Guyana and the US Permian Basin. Analysts believe that these sites will remain profitable even if the price of oil drops to 35 dollars per barrel.

The recent weakness in oil prices has now brought billionaires into stocks. Over the past few months, the energy firm has seen a buying spree by smart-money investors, even as the mainstream opts for more expensive tech and clean energy firms. Our partner’s system also places XOM in the “green zone” category – a typical sign of appreciation to come.

This could be the start of a larger buying trend. This month, the US Energy Information Administration (EIA) noted that global oil inventories continue to be drawn; they estimate that Brent crude oil prices should rise back above $80 a barrel within a month and that natural gas prices will rise by more than 55% by next year. In addition, a colder-than-expected winter could push up natural gas prices in Europe — a factor that helped Exxon soar 80% in its share price in 2022.

Please note that we do recognize the long-term risks of buying Exxon stock. Oil markets remain in secular decline, and Exxon’s chemicals business won’t fully absorb lost demand. The firm also has an image problem that was recently compounded by a lawsuit in California over alleged decades of cheating around plastics recycling.

Still, Exxon remains a compelling bet for conservative investors looking for dividends and short-term capital. Don’t let the negative press convince you otherwise… Exxon still has plenty of earning power left.

Next steps

In 2004, renowned investor Bill Miller created a team to investigate Google, a company that was about to go public.

“You might remember that Internet stocks were going bad back then,” said Michael Mauboussin, one of Millier’s key analysts. “And the popular media said let’s not touch this IPO with a 10-foot pole.”

But Miller Legg Mason Value Trust’s team made a huge bid anyway, buying 2.3 million shares of the newly public Google at $85. They reasoned that Google has enormous growth potential and it would be foolish to miss out. Over the next two years, their stake will grow from $196 million to $1.1 billion.

These are the kinds of bets that many billionaire investors make. And as Eric points out in a recent presentation, these investments can be further enhanced by adding a layer of quantitative screening.

If you buy shares of UBER, NVDA or XOM – or any shares – you must have a solid exit strategy in effect for when the next major sale occurs. Something based on math and data, not emotion.

That’s why I want to turn your attention to a discussion that Eric had last night.

He sat down with a special guest who revealed a powerful tool that could help you determine the best time to sell your stocks before the next big bust hits.

You can watch their video conversation now.

We’ve got you a 90-day trial, but you have to act before September 30th.

Check it out…and I’ll see you back here next Sunday.

Sincerely,

Thomas Yeung

market analyst, InvestorPlace