What the World's Top Funds Are Buying Now

Every three months, large hedge funds that manage over $100 million in assets must submit a form to disclose their holdings as of the end of the previous quarter.

This form is known as a 13F filing and reveals the investments made by some of the most significant money managers in the world, including what they bought, what they sold, and what they currently own.

Although these filings are submitted within 45 days after the quarter ends, they do not provide a complete picture of hedge fund activities. However, they offer regular investors a glimpse into where some of the sharpest minds in finance are currently investing their capital.

Here’s an overview of recent actions by some of the world’s leading funds.

Berkshire Hathaway

Warren Buffett’s Berkshire Hathaway is not merely a hedge fund; it operates as a holding company with diverse investments in numerous firms.

Nonetheless, Berkshire is required to file 13F disclosures, which are valuable for investors for the same reasons as those from top hedge funds. With a market capitalization nearing $700 billion and cash holdings over $325 billion, Berkshire's moves are especially noteworthy.

In the latest filing from November, Berkshire disclosed a $550 million investment in Domino’s Pizza (DPZ) while gradually reducing its position in Apple Inc. (AAPL). Despite this reduction, Berkshire still holds 300 million shares of Apple.

Berkshire Hathaway has delivered an average annual return of 19.8% since its inception in 1965, translating to an extraordinary total return of 3,747,646% over the years.

Third Point

Billionaire Dan Loeb's Third Point fund faced challenges in 2022, with a decline of -21.1% versus a 17.7% drop in the S&P 500 during the same period. This underperformance was largely due to its significant exposure to technology stocks, which were heavily hit by market selloffs.

Fortunately, Third Point rebounded sharply in the last quarter of 2023. Historically, Third Point has had an impressive long-term performance, averaging over 15% annually from its inception in 1995 through 2016. Its venture arm, Third Point Ventures, boasts an even higher average of 16% since it was established.

A consistent 16% gain over 27 years converts a $10,000 investment into more than $540,000.

Third Point’s investments are concentrated, with its five primary stocks making up over 70% of its portfolio as of December 31. The largest holding is PG&E Corp. (PCG), a choice that diverges from Buffett's strategy, as Berkshire has denied interest in acquiring PG&E’s parent utility company. Other holdings include dividend-heavy firms, such as UnitedHealth Group Inc. (UNH), which has raised its dividend impressively by 5,400% since 2010.

Appaloosa LP

David Tepper's Appaloosa LP has achieved average returns of 25% annually since its launch in 1993, surpassing Berkshire Hathaway's long-term performance, albeit over a significantly shorter time frame. This rate of return can turn an initial $10,000 investment into an astounding $7 million.

Like Buffett and Loeb, Tepper includes utility companies and dividend champions among his top holdings. For instance, he invested $26 million in Walt Disney Company (DISN), which has increased its dividend by 486% since 2011. While Appaloosa has a smaller stake in UnitedHealth Group—around $80 million—it shares a focus on strong dividend payers.

Additionally, Appaloosa’s top five holdings account for over 55% of its portfolio, reflecting a common practice among successful investors. The strategy involves identifying a few high-confidence investments, taking substantial positions, and allowing them to mature over time.

In conclusion, by observing the latest 13F filings, investors can gain insight into the current strategies of some of the most successful funds in the market.

Funds, Investments, Stocks