Thanks to regulatory requirements put in place by the Securities and Exchange Commission (SEC), everyday investors have a window into the trading moves being made by some of today’s greatest financial minds. By looking at the 13F filings submitted to the SEC by large institutional investors each quarter, it’s possible to get some clear insight into what stocks billionaire Wall Street investors are buying and selling.
While each investor ultimately has to decide which stocks are a good fit, taking some cues from hugely successful investors could help you supercharge your own portfolio. With that in mind, read on for a look at two stocks that high-profile billionaires have been buying up lately, along with some analysis from two Motley Fool contributors.
One of history’s greatest investors likes this AI stock more than Nvidia
Keith Noonan: Ken Griffin is the founder and CEO of Citadel — the most successful hedge fund of all time. With that kind of pedigree, it’s no wonder investors watch Griffin’s moves in the artificial intelligence (AI) space. And he has been making some eye-catching moves.
In the second quarter, Citadel sold roughly 79% of its stake in Nvidia. Meanwhile, Griffin’s hedge fund poured some money into another high-profile AI stock — Palantir Technologies (NYSE: PLTR). Citadel bought more than 5.2 million shares of Palantir stock, boosting its stake in the AI software company by 1,140%.
Griffin’s bet on Palantir has been paying off so far, with the data software specialist delivering a fantastic second-quarter report earlier this month. In the second quarter, sales grew 27% year over year to hit $678 million. The business recorded a net income of $134 million — coming in at 20% of total revenue for the period. Net income was up roughly 386% compared to the prior-year period, and the company’s growth engine has never looked stronger.
With help from sales of its Artificial Intelligence Platform (AIP) software suite, Palantir’s U.S. commercial segment sales grew 33% year over year to account for 45% of overall revenue. Meanwhile, sales to government customers accounted for the remainder of sales and grew 23% year over year. Growth for both segments accelerated on a sequential quarterly basis, and there are signs that momentum will continue to pick up in the near term.
Palantir has been scoring big wins in the private sector, and sales to commercial customers will soon account for overall revenue, even with public sector contracts also picking up speed. With the company’s fastest-growing segment soon poised to be its largest, that sets the stage for overall revenue growth to continue accelerating. Along with the business’s very impressive margins, Palantir’s sales growth outlook suggests the business is positioned to continue delivering robust earnings growth.
A deceptively simple coffee shop chain
Jennifer Saibil: There’s a secret that billionaire investors know but growth investors often miss: Sometimes, it’s the simplest of businesses that offer incredible opportunities. You don’t always have to follow the hype to find great new stocks. In fact, sometimes the most-hyped stocks could backfire for obvious reasons: They never turn a profit, they become too expensive too quickly, and so on.
Dutch Bros (NYSE: BROS) is a coffee shop chain, and there isn’t anything significantly different about it. But there’s enough about its model that sets it apart from other shops and chains. It’s demonstrating strong growth and has a massive future opportunity.
All great businesses start with a great product, and that’s the first thing to note about Dutch Bros. Customers really like its stores and beverages. It has a distinct, customer-centric culture and a down-to-earth atmosphere that appeals to consumers nationwide. Right now, Dutch Bros has 912 locations in 18 U.S. states, mostly concentrated on the West Coast. It’s planning to open around 150 stores this year and envisions expanding across the U.S. to about 4,000 shops over the next 10 to 15 years. That’s a long growth runway of new store growth, and that’s what’s driving total revenue growth right now.
There’s more pressure on comparable sales growth, and that’s something to watch. But it’s rebounded from lows that went into declines, and it’s proving resilient despite inflation. There are some growing pains, which aren’t unusual for high-growth companies. But the concept appears solid, and Dutch Bros is becoming sustainably profitable.
Some of the billionaire hedge fund managers that own Dutch Bros stock include Ken Griffin of Citadel Advisors, who owns 3.9 million shares, John Overdeck and David Siegel of Two Sigma Investments, who own 1.3 million shares, and Steven Cohen of Point72 Asset Management, who owns 1.15 million shares.
Dutch Bros stock fell along with many other restaurant stocks over the past few months because it looks like summer restaurant spending will be lower than expected. The stock price is roughly flat year to date, and now is an excellent time to buy shares.
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Jennifer Saibil has no position in any of the stocks mentioned. Keith Noonan has no position in any of the stocks mentioned. The Motley Fool has positions in and recommends Nvidia and Palantir Technologies. The Motley Fool recommends Dutch Bros. The Motley Fool has a disclosure policy.
Billionaires Are Buying These 2 Incredible Growth Stocks was originally published by The Motley Fool
