Only a handful of money managers are good enough at picking stocks that they attract billions from institutional and individual investors. You might be an outsider with limited funds to invest, but that doesn’t mean you can’t buy many of the stocks that grace the portfolios of the world’s most successful investors.
Following billionaire stock pickers is a lot easier than you might think. The U.S. Securities and Exchange Commission requires practically anyone managing over $100 million in assets to disclose their trading activity every three months.
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During the last three months of 2023, Ken Griffin of Citadel Advisors bought more than 2.1 million shares of Bristol Myers Squibb (BMY 0.98%). Griffin also increased Citadel’s investment in Clorox (CLX -0.23%) by about $90 million — and he wasn’t the only billionaire attracted to the consumer goods giant. Billionaire Steven Cohen bought over 1 million shares of Clorox for Point72 Asset Management’s portfolio.
Here’s a closer look at two stocks that billionaires are snapping up left and right to see if they could be a good fit for your portfolio.
Bristol Myers Squibb
Bristol Myers Squibb is one of America’s largest pharmaceutical companies. It’s raised its dividend payout every year since 2009, and at recent prices, the stock offers a big 4.7% yield.
Bristol Myers Squibb offers an above-average yield because investors are nervous about its ability to grow earnings and raise its quarterly payout in the years ahead. Revlimid was the company’s largest revenue stream, but generic competition knocked sales of the multiple myeloma therapy 39% lower to $6.1 billion in 2023.
Bristol Myers Squibb relied on Revlimid for 13.5% of total revenue last year, and it faces another big patent cliff in a couple of years. Eliquis, a blood thinner that racked up $12.2 billion in sales last year, could face generic competition in 2026.
Billionaires have been buying Bristol Myers Squibb stock left and right because they know that the company wisely invested proceeds from Revlimid and Eliquis into the development of potential new blockbuster drugs. Last year, the company’s portfolio of 10 recently launched drugs grew combined sales by 77% to $3.6 billion.
Shares of this pharma giant are trading for such a low valuation that Citadel can record market-beating gains even if the company’s bottom line never rises again. The stock has been trading for about 7 times forward-looking earnings expectations. For most investors, adding some shares to a diverse portfolio is a great way to boost your passive income stream in the long run.
Clorox
Bleach-based products that share its name aren’t all that Clorox sells. Billionaire investors piled into the consumer goods giant because it markets heaps of popular goods, including lip balm from Bert’s Bees, water filters from Brita, and ranch dressing from Hidden Valley.
A cyberattack last August hammered Clorox stock, and it’s still trading at relatively depressed prices. At recent prices, it’s been trading for around 25.9 times forward-looking earnings expectations.
The stock has been offering a 3.3% dividend yield and the peace of mind that comes with a 21-year dividend payout-raising streak.
Earnings are back up to a level that supports higher dividend payments now that Clorox has recovered from last summer’s debilitating cyberattack. During its fiscal second quarter, which ended Dec. 31, 2023, adjusted earnings more than doubled to $2.15 per share. That’s heaps more than the company needs to support a quarterly payout currently set at $1.20 per share.
If the ups and downs of the pharmaceutical industry make you nervous, the steady growth that comes with branded consumer goods makes Clorox look extra attractive right now. Following billionaire investors by adding some shares to a diversified portfolio could help boost your passive income stream over time.
Cory Renauer has no position in any of the stocks mentioned. The Motley Fool has positions in and recommends Bristol Myers Squibb. The Motley Fool has a disclosure policy.
