At Billionaire’s Portfolio we study the buying patterns of the world’s greatest billionaire investors and hedge funds. So when the greatest billionaire investors in the world are scooping up beaten down stakes in energy companies, we pay close attention.
We know two things about the best billionaire investors in the world: 1) they have made billions throughout their careers buying when everyone else is selling, and 2) they have a knack for picking the winners, the stocks and sectors, and marking the bottom when they enter.
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Let’s look at the investments the world’s best billionaire investors have been bottom fishing and/or adding to their positions into the sharp declines:
1) Phillips 66 PSX +1.30% (PSX) – Buffett revealed last September he had taken a $4.5 billon position in the energy stock Phillips 66. This is a typical Buffett stock. It sells for just 9 times earnings, a huge discount to the S&P 500’s P/E of 21, and the stock pays nearly 3% in a dividend. Furthermore, the company has a pristine balance sheet, with very little debt – a classic Buffett stock, cheap and safe. Buffett has added another $700 million to this stock just in the past two weeks. He’s the largest shareholder.
2) Williams Companies (WMB) and Pioneer Natural Resources PXD +5.31% (PXD) – Billionaire Stephen Mandel, of the hedge fund Lone Pine Capital, more than doubled his stake in Williams over the past month. Mandel’s Lone Pine now owns 5.6% of Williams or almost 42 million shares. This is up from 17.6 million shares a quarter ago. Mandel and Lone Pine also initiated a brand new position in Pioneer Natural Resources according to their most recent investor letter. Billionaire Seth Klarman’s Baupost Group owns $450 million worth of PXD, his fourth largest position.
3) Cheniere Energy (LNG) – Carl Icahn also initiated a $1.3 billion position in energy stock LNG in August of last year, taking an 8% ownership in the company. Cheniere is on track to become the first U.S. company able to export liquefied natural gas. This makes LNG a classic “wide moat” (no competition) stock. Icahn has already secured two board seats on Cheniere’s board. Icahn’s “board seat effect” has proven to be a huge predictor of success for the legendary activist. According to an essay Icahn penned last year, when he gets a board seat in a company, his stock returns averages 27.5%. Since his initial stake in August, Icahn has added to his stake several times into the end of the year. He now owns 13.8% of LNG — the largest shareholder. And Seth Klarman’s Baupost Group just added another 15 million shares this month to his already enormous stake in LNG. He now owns 15% of the company.
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