Super Investor Portfolio Update Q4 2024

This week, the release of 13-F filings has provided fresh insights into the portfolio strategies of the world’s most prominent investors. In this article, we will analyse the holdings and recent adjustments made by Warren Buffett (Berkshire Hathaway), Stanley Druckenmiller (Duquesne Family Office), Michael Burry (Scion Asset Management), and Bill Ackman (Pershing Square Capital Management). Additionally, a comprehensive report is available for download, offering detailed information on the portfolios and changes of these investors, along with others such as Ray Dalio, Howard Marks, George Soros, and more.

Warren Buffett:

The pie chart above shows the current asset allocation within the Berkshire Hathaway portfolio. This period has been marked by a strategic reduction rather than an expansion in Warren Buffett's top holdings. Here are key observations:

• Apple Inc. (AAPL) - There has been a significant reduction in the stake by approximately 25%. Despite this divestiture, Apple remains a cornerstone in the portfolio, reflecting Buffett's continued confidence in its long-term value. The stock's year-to-date performance has been robust, increasing by 22%, which might suggest Buffett is taking profits or rebalancing in light of the stock's valuation.
• Bank of America Corporation (BAC) - Similarly, the position in Bank of America has seen a 23% decrease. This adjustment comes despite the bank's stock appreciating by 39% year-to-date. This move could be interpreted as a strategic de-risking or a reallocation towards other opportunities or cash reserves, especially considering the banking sector's volatility and interest rate environment.

Building on the previous analysis, Warren Buffett has also made some strategic investments this quarter:

• Heico Corp (HEI) - A modest increase of 0.52% in shares indicates a continued interest in this aerospace and electronics company. Heico is known for its high gross margins and substantial EBITDA margins, aligning with Buffett's preference for businesses with strong profitability metrics.
• Sirius XM Holdings Inc. (SIRI) - The addition of Sirius XM to the portfolio suggests a play on a business model with high gross margins and robust EBITDA margins, which are characteristics Buffett typically seeks. This investment might be driven by the company's stable subscription revenue model and its position in the media and entertainment industry.
• Domino's Pizza, Inc. (DPZ) - Another new addition, Domino's leverages a business model that supports high gross margins through its focus on delivery and franchise operations. The 18%+ EBITDA margin indicates operational efficiency and profitability, appealing traits for an investor like Buffett who looks for companies with predictable earnings.
• Pool Corporation (POOL) - This investment reflects Buffett's strategy of investing in companies with strong financial health. Pool Corp, a distributor of swimming pool supplies and equipment, boasts high gross margins, likely due to its distribution model which benefits from economies of scale and brand loyalty.

Overall, Buffet has been a net seller of equities this quarter, which might indicate a cautious approach by Buffett, possibly in anticipation of market corrections or more favourable investment opportunities.

Stanley Druckenmiller:

The investment portfolio of Stanley Druckenmiller's Duquesne Family Office has undergone significant restructuring this quarter, reflecting strategic shifts in his investment thesis. 

Here's an overview of the key changes:

• Flitter Entertainment (FLTR): A -22% decrease in shares suggests Druckenmiller might be reallocating capital or expressing a reduced conviction in the short-term growth prospects of Flitter Entertainment. This could be due to sector rotation, concerns over valuation, or anticipated changes in consumer spending patterns.
• Coherent Corp (COHR): -22% decrease in shares in Coherent Corp indicates a possible reassessment of the company's position in his portfolio, potentially due to concerns about future profitability, competition, or a strategic pivot away from certain technology sectors.
• Natera Inc. (NTRA): An 80% increase in Natera shares marks a significant bullish stance by Druckenmiller. Natera, involved in genetic testing, might be seen by him as a growth opportunity in the healthcare sector, possibly due to its innovative technology, market potential, or a favorable outlook in personalized medicine.
• MercadoLibre Inc. (MELI): With a 32% increase in his stake, Druckenmiller is clearly expanding his exposure to Latin America's e-commerce leader. This move could reflect optimism about the region's economic recovery, consumer trends favoring online shopping, or MercadoLibre's robust operational performance and market dominance.
• Freeport-McMoRan Inc. (FCX): The 20% boost in Freeport-McMoRan shares indicates a strategic bet on commodities, particularly copper, which is crucial for electrification and renewable energy projects. This aligns with Druckenmiller's known strategy of capitalizing on long-term trends like AI and the global green energy transition.
• US Regional Bank ETF (KRE): Druckenmiller has invested 4% of the portfolio in regional banks, potentially betting on de-regularization by Donald Trump boosting the profitability of these banks.

Druckenmiller's adjustments this quarter could be explained by:

• Sector Focus: The increases in Natera and MercadoLibre suggest a focus on sectors with growth potential like healthcare and e-commerce, possibly anticipating that these sectors will outperform in the near future.
• Opportunistic: The sale of shares in Flitter and Coherent might be part of a broader reallocation strategy, moving funds from areas perceived as less promising into those with perceived higher growth or value opportunities.
• Commodity Play: Increasing his stake in Freeport-McMoRan could be a play on commodities as a hedge against inflation or a strategic investment in materials critical for future technologies.

Michael Burry:

As shown in the chart above, the famous 2008 short seller Michael Burry has a highly concentrated portfolio of 8 holdings.

Reductions in:

• The RealReal Inc. (REAL): 50% reduction in his stake in The RealReal, an online luxury consignment store, could reflect concerns about the luxury resale market's outlook or skepticism regarding the company's profitability and growth trajectory amidst a challenging consumer environment.
• American Coastal Insurance Corporation (ACIC): The 60% cutback in the company shares might indicate a strategic retreat from the insurance sector, potentially due to increased risks from climate-related events, regulatory changes, or a reassessment of the sector's risk-reward profile.

Increases in Chinese Tech Giants:

• JD.com Inc. (JD): A 24% increase in shares shows a continued or renewed faith in China's e-commerce sector, betting on JD's potential to capture more market share or benefit from regulatory easing in China.
• Baidu Inc. (BIDU): With a 15% increase, Burry might be anticipating a recovery or growth in Baidu's AI and search engine business, perhaps due to new product developments or an improving regulatory landscape for tech companies in China.
• Alibaba Group Holding Ltd. (BABA): A 25% increase in Alibaba shares could signal confidence in Alibaba's turnaround efforts under new management or its ability to navigate through regulatory challenges, possibly betting on its long-term dominance in e-commerce and cloud computing in China.

Interpretation:

• Value and Turnaround Potential: The focus on Chinese tech giants, despite their recent challenges, indicates a belief in their long-term value and potential for recovery or growth. This aligns with his strategy of investing in undervalued or out-of-favor stocks where he sees significant turnaround potential.

Bill Ackman:

This quarter, Bill Ackman has made big changes to his portfolio.

Key Changes:

• Brookfield Corporation (BN): Ackman has significantly ramped up his investment in Brookfield by 377%, positioning it as his largest holding. This bold move could reflect a strong belief in Brookfield's asset management prowess, its diversified portfolio which includes infrastructure, renewable energy, and real estate, and potentially undervalued assets in a recovering global economy.
• Nike Inc. (NKE): An aggressive 435% increase in his stake in Nike suggests a high conviction in the brand's enduring appeal, its dominance in the sports apparel and footwear market, and its potential for growth through innovation and global expansion.
• Hilton Worldwide Holdings Inc. (HLT): The decision to trim his Hilton position by 18% might indicate a strategic reallocation of capital. This could be due to various factors such as valuation concerns, a shift in focus towards sectors with better growth prospects, or taking profits from Hilton's post-recovery gains in the hospitality industry.

Interpretation:

• Value and Turnaround Potential: Nike has had a bad Year to date performance of -30% and might be undervalued.
• Tariffs and deglobalization: Increase in demand for on-shore infrastructure could boost Brookfields profits.
   

Full Report:

The full super investor report is available for download below.

Disclaimer:

The information contained in this investment analysis report is for informational purposes only and does not constitute, and should not be construed as, an offer to sell or the solicitation of an offer to buy any security.

The 13F must be filed within 45 days after the end of each calendar quarter. This means that by the time the public sees these filings, the information is already over six weeks old.