The World’s Biggest Investors Just Went Shopping. Here’s The Haul.

In the investing world, a whale is a company or individual with the heft and cash needed to influence the price of an asset. And because you need to have carved out quite the career to get to that point, their hunches tend to be more on the mark than most. So let’s go whale watching, and check out what some of the world’s biggest investors bought – and dropped – in last quarter.

Berkshire Hathaway

Let's start at the top: Berkshire Hathaway, the biggest whale in the pod with nearly $350 billion invested in US stocks. Berkshire made three new stock investments over the quarter, all bullish bets on the three biggest US homebuilders, Lennar, NVR, and DR Horton. That might come as a surprise, since high interest rates were expected to dampen demand for mortgages and, in turn, homes. But that hasn’t been the case (yet). All three companies are limited in their direct land exposure, which reduces the risk of writedowns and improves capital efficiency, leading to higher returns. Plus, each of the trio generates strong free cash flows – little surprise as they’ve met Buffett’s screening criteria.

Besides that, Berkshire refreshed its energy stocks, reducing Chevron and adding to Occidental. The only other addition was to its holding in Capital One, while Berkshire sold almost half its stake in General Motors, Celanese, and Global Life and more than half its stake in Activision.

The Bill and Melinda Gates Foundation Trust

The Bill and Melinda Gates Foundation Trust has $42 billion concentrated in only 23 US stocks, and that portfolio didn’t change much in the second quarter. The first move was to increase its holding in Berkshire Hathaway by 28%, to make up just over 20% of the overall portfolio. Mind you, that’s still smaller than its nearly 32% allocation in Microsoft – no prizes for guessing that one. Foundation’s only other addition took advantage of the Anheuser-Busch InBev sell-off in April.

The Children's Investment (TCI) Fund Management

The Children's Investment (TCI) Fund Management is run by activist investor Chris Hohn. The fund boasts $33 billion in the US, invested in only ten stocks. It tends to pick high-quality companies with sustainable competitive advantages.

TCI increased its stake in Thermo Fisher Scientific to $1.6 billion, nearly 5% of its portfolio. And the fund made one brand-new addition to its portfolio: Ferguson, one of the biggest and most diverse industrial distributors – think spanners, plumbing, waterworks, and air heating and cooling systems – with a nearly 50% split between residential and non-residential markets. The filing disclosed was relatively small (for a whale, anyway) at $77 million, but this could be the start of a bigger position.

Tech was trendy

Legendary name George Soros reported new positions in Advanced Micro Devices, Nvidia, and Microsoft, while the Third Point fund added new holdings in Amazon, TSMC, Nvidia, and Uber.

David Tepper's Appaloosa went all-in on tech and AI too, aggressively multiplying its Nvidia stake by more than five times and doubling its stake in Meta, making each nearly 8% of its overall US stock portfolio. It also topped up its holdings in Microsoft, Amazon, Google, and Uber, and bought a new $270 million position in Advanced Micro Devices. And bucking the mainstream negative sentiment around China’s lagging economy, Appaloosa opened a new $400 million position in Alibaba.

Michael Burry made headlines

Michael Burry of Scion Asset Management and, perhaps more memorably, “The Big Short” fame has been back in the headlines lately. After allocating 20% of his portfolio to China-based Alibaba and JD.com in the first quarter of this year, the latest filings show he sold both during the second quarter. So while the multiple challenges facing the Chinese economy haven’t spooked Appaloosa, it looks like they got to Scion.

But what really made waves was the sizeable downside protection he purchased on both the Nasdaq and S&P 500 indexes – essentially betting against them and expecting them to drop. He did that by buying put options that increase in value when market prices fall. See, this year’s market rally has meant the price of volatility – the key component in the pricing of options – is its lowest since 2019, so taking advantage of that seems sensible. And because put options are leveraged, the maximum loss Scion can make if stock markets don’t decline as it expects is a fraction of the $1.6 billion exposure: likely around $70 million.

Scion wasn’t alone, mind you. Rokos Hedge Fund – which bets on macroeconomic trends – disclosed that it had poured $2.7 billion into the Invesco QQQ Trust ETF (QQQ) during the second quarter, along with a sizeable number of put options on the Nasdaq 100 and call options on the Russell 2000 Index. When volatility’s low, options can be a tidy way to build market exposure, no matter whether you are bullish or bearish.