There is a handful of investors who belong to a very exclusive group: the billionaire's club. While there are nearly 1,000 billionaires in the world as of March 2010, the number of people who made those riches through their investing skills is significantly smaller. These prescient market participants turned their initial stakes into enormous fortunes – and it's no surprise that investors clamor to follow their leads.
In Pictures: The World's Greatest Investors
While professional investors' moves were once mysterious to Main Street, the internet has substantially closed the information gap. Plus, in 1975, Congress passed section 13(f) of the Securities Exchange Act, mandating that any institutional investment manager with assets under management (AUM) of $100 million or more would have to disclose certain holdings to the public to increase transparency. Since the passage of the act, 13F Forms have provided a quarterly glimpse at how institutional dollars are managed. What this means is that the holdings of some of the best investors are freely accessible to the public online.
13F forms have also provided plenty of fodder for so-called "coattail investors", who try to replicate the portfolios of renowned professional investors, and thus ride their coattails to riches of their own.
Here's a look at key buying and selling activity for a few billionaire-managed portfolios in the first quarter of 2010.
1. Warren Buffett
It's impossible to talk about billionaire investors without bringing up Warren Buffett. Known as the "Oracle of Omaha," Buffett is considered by many to be the world's best investor. Forbes ranks him as the second-wealthiest man in the U.S. (after Microsoft founder Bill Gates), and the richest investor with a fortune valued at $47 billion in 2010.
Through his storied firm Berkshire Hathaway (NYSE:BRK.A,BRK.B), Buffett has made some major moves in the last year, most notably the acquisition of Burlington Northern, which ceased trading earlier in 2010. But the railroad giant isn't the only big purchase Buffett has under his belt.
While Buffett didn't initiate any new positions in Berkshire's portfolio in Q1, he did up the stakes in a few of the company's portfolio positions, including waste management firm Republic Services (NYSE:RSG), document management company Iron Mountain (NYSE:IRM) and medical supply giant Becton, Dickinson (NYSE:BDX).
Berkshire Hathaway also closed positions in a handful of companies, including WellPoint (NYSE:WLP) and UnitedHealth Group (NYSE:UNH), two major health insurers. (For more picks, see A Glimpse Into Buffett's Portfolio.)
2. George Soros
Hungarian-born George Soros is famous for co-founding the Quantum Fund, a private hedge fund responsible for the bulk of Soros' $14 billion fortune. The fund, which was launched in 1970, was notorious for focusing on overseas investments – particularly major bets on currencies and emerging market stocks.
Some of the new positions taken on by Soros Fund Management last quarter include an $81 million stake in Cobalt Energy (NYSE:CIE), a $54.2 million stake in PNC Financial Services (NYSE:PNC) and a $33.1 million bet on Telecom Argentina (NYSE:TEO).
Those buys were offset in part by large position closures, including a $66.4 million stake in food processing firm Bunge Limited (NYSE:BG) and a $22.4 million stake in Coach (NYSE:COH). (To learn more about this high-stakes investor, see George Soros: The Philosophy Of An Elite Investor.)
3. Carl Icahn
Noted shareholder activist (and blogger) Carl Icahn is known for taking a hands-on approach to the companies he and his funds invest in, battling for board seats and taking an active role in company management. Icahn's investment style has paid off over the years, yielding a $10.5 billion fortune and the honor of being America's wealthiest shareholder activist.
Icahn's firm only took on one new position last quarter, a $136 million stake in Genzyme (Nasdaq:GENZ), a biotechnology company that focuses on rare genetic disorder services and products.
His firm did close more than a couple of old positions, however, selling off shares of beleagured corporate lender CIT Group (NYSE:CIT) and troubled video service Blockbuster (OTC:BLOKA). (For more on this investor's style, see Can You Invest Like Carl Icahn?)
4. T. Boone Pickens
Texas oil barron T. Boone Pickens wasn't always a professional investor. Before launching his self-named BP Capital hedge fund in the late 1990s, Pickens headed up Mesa Petroleum, one of the largest independent oil companies in the world. But in the years since, he's become a major proponent of alternative energy sources, and continued to steer his fund toward potentially lucrative energy players. Pickens has an estimated $1.1 billion fortune in 2010.
New positions in BP Capital's portfolio include an $8.1 million stake in Halliburton (NYSE:HAL), a $7.9 million stake in small-cap oil service firm Dawson Geophysical Company (Nasdaq:DWSN), and a $5.5 million position in Baker Hughes (NYSE:BHI).
Taking Stock of Other Billionaire Portfolios
Following 13Fs each quarter can give Main Street investors important insights into how some of Wall Street's biggest names are aligning themselves. But you can't read too much into the positions you see; because only certain types of investments need to be disclosed under current laws, the 13F doesn't give a full picture of how an institutional investor is positioned. That's especially true of hedge funds, which sometimes undertake complex investment strategies to generate gains.
Stick with investors whose investment philosophies are well known and you should make out better in the end. You can find current 13F filings on the SEC website.
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