Stock Picks That Billionaires Love

American International Group

• Billionaire investor: Dan Loeb (Third Point)
• Stake value: $322.5 million
• Percent of portfolio: 5.5%

Dan Loeb built his estimated $3.5 billion fortune in part by spotting beaten-down bargains, and he says he's found a big one in insurance company American International Group (AIG (opens in new tab)).

Loeb's Third Point hedge fund and its $27.6 billion in assets under management (AUM) initiated a position of 5.1 million shares worth $322.5 million in AIG in Q4. At 5.5% of Third Point's total portfolio value, AIG is the New York hedge fund's sixth largest holding.

"AIG has undergone a massive overhaul since the global financial crisis," Loeb wrote in a quarterly letter to investors (opens in new tab). "Alongside the operational turnaround, AIG is repositioning itself as a pure-play P&C insurer via the IPO of Corebridge. This is an important catalyst for the business."

Excluding Corebridge, today AIG trades at 1.1 times book value, Loeb notes. At the same time, "pure-play global P&C insurance peers" trade at a "50% multiple premium." The billionaire expects AIG to close that "substantial valuation discount."

Taiwan Semiconductor Manufacturing

• Billionaire investor: Stephen Mandel (Lone Pine Capital)
• Stake value: $774.1 million
• Percent of portfolio: 7.4%

Warren Buffett's Berkshire Hathaway (BRK.B (opens in new tab)) shocked investors when it revealed that it all but dumped its stake in Taiwan Semiconductor Manufacturing (TSM (opens in new tab)) in the fourth quarter. After all, Berkshire initiated the huge and surprising stake only a quarter earlier. Given that Buffett's preferred holding period for a stock is "forever (opens in new tab)," it's understandable if investors who copied the move have a brutal case of whiplash.

Happily for TSM bulls, Stephen Mandel, with an estimated net worth of $3.6 billion, remains highly bullish on the world's largest pure-play semiconductor foundry. 

Mandel's Lone Pine Capital hedge fund ($44.3 billion AUM) once again raised its stake in TSM in Q4, this time by 8%, or 782,730 shares. The Greenwich, Connecticut-based fund initiated the position in the first quarter of 2022, and added to it in every quarter of last year.

Note that TSM stock fell 38% in 2022. Lone Pine essentially bought it at every opportunity on the way down, picking up shares at ever cheaper prices. With 10.4 million shares, TSM is now Lone Pine's fifth largest holding.

By the way, TSM stock gained more than 17% over the first eight weeks of 2023.

Nvidia

• Billionaire investor: Philippe Laffont (Coatue Management)
• Stake value: $677.9 million
• Percent of portfolio: 7.6%

Philippe Laffont accumulated an estimated net worth of $6.9 billion in part by doubling down on his highest convictions at opportunistic moments. And just such an opportunity presented itself in spades in Q4. 

Shares in Nvidia (NVDA (opens in new tab)) lost half their value in 2022, as rising interest rates, an oversupplied marketplace and waning end-demand took a nasty toll on semiconductor stocks. 

Laffont's Coatue Management hedge fund ($73.3 billion AUM) has owned shares in NVDA since 2016. And so when shares dove last year, Laffont went bargain shopping with both fists. The New York hedge fund upped its stake in NVDA by 37%, or 1.3 million shares, in Q4.

At the end of 2022, Coatue held a total of 4.6 million NVDA shares worth $677.9 million. That position is now worth considerably more. That's because NVDA stock bounded back in 2023, gaining more than 55% for the year-to-date. 

Not for nothing does Nvidia make the list of one of the 30 best stocks of the past 30 years. 

RH

• Billionaire investor: Daniel Sundheim (D1 Capital Partners)
• Stake value: $473.1 million
• Percent of portfolio: 9.7%

Daniel Sundheim's D1 Capital Partners has made quite a name for itself during its five short years of existence. The New York hedge fund began trading with "only" $5 billion in capital. Today, D1 boasts more than $40 billion in AUM. 

Along the way, Sundheim built an estimated net worth of $2.9 billion. In a nod to his precocious success, some wags call Sundheim the LeBron James of investing. Take a look at D1's equity portfolio, however, and another famous billionaire comes to mind.

D1 and Warren Buffett's Berkshire Hathaway both maintain stakes in RH (RH (opens in new tab)), formerly known as Restoration Hardware, and Floor & Decor (FND (opens in new tab)). 

But where the Berkshire Hathaway equity portfolio allocates comparatively little of its capital to the two home goods retailers, D1 Capital is bulking up big time. 

D1 initiated a stake in FND in Q4 2022, buying nearly 3 million shares worth $205 million. The stake immediately made FND the hedge fund's ninth largest holding.

More impressively, Sundheim increased D1's stake in RH by 56%, or 640,988 shares, in Q4. At 9.7% of the portfolio, RH is D1's third largest holding.

Meta Platforms

• Billionaire investor: Chase Coleman III (Tiger Global Management)
• Stake value: $956.0 million
• Percent of portfolio: 11.7%

At one point during the fourth quarter, shares in Meta Platforms (META (opens in new tab)) had lost almost three-quarters of their value for the year-to-date. The Facebook parent routinely makes the list of hedge fund's favorite blue chip stocks, but plenty of them wanted out as META's stock price crumbled.

Chase Coleman III didn't amass an estimated net worth of $8.5 billion by following the crowd, however. Hedge funds as a group were net sellers amid META's collapse — but that's when Coleman's Tiger Global Management swooped in to buy.

The New York-based hedge fund upped its stake in META by a whopping 76%, or 3.5 million shares, in Q4. By quarter's end, Tiger Global ($124.7 billion AUM) held 7.9 million shares in the social media network, worth $956.0 million. 

Coleman, who first bought META in 2017,  increased Tiger's stake during the second and third quarters, as well. At 11.7% of the portfolio, Meta Platforms is the hedge fund's third-largest holding.