10 Stocks Warren Buffett and Insiders Are Crazy About
In this article, we will take a detailed look at the 10 Stocks Warren Buffett and Insiders Are Crazy About. For a quick overview of such stocks, read our article 5 Stocks Warren Buffett and Insiders Are Crazy About.
Bullish calls on the stock market are growing louder by the day as more and more analysts believe the stock market rally that started on the back of mega-cap tech stocks is sustainable and the US economy might not see the much-dreaded recession after all. Wedbush analysts led by Dan Ives recently said in a note that the tech rally fueled by the AI revolution can keep going. Wedbush analysts in a note called the current AI wave a “transformational tech trend” that they have “not seen since the start of the internet in the mid-90s.”
Wedbush analysts also believe the AI revolution would create more opportunities for software companies down the road and could lead to a massive $1 trillion in spending over the next decade.
2024: "An Abnormally Normal Year"?
Dynasty Financial’s Ron Insana recently said while talking to CNBC that the market would remain calm and stable in 2024. Insana believes the market overreacted to the latest inflation report and PPI was not as bad as it looks. He thinks that making assumptions based on a single month’s inflation data would be a wrong approach as he believes inflation will continue to decline for the rest of the year. He also thinks the Fed will begin cutting rates starting the middle of 2024. He thinks 2024 would be an “abnormally normal” year barring any “external shocks” which he is not expecting.
Given this bullish outlook, it would be important to see which stocks masters of the money game have been buying heading into 2024.
Methodology
For this article we first scanned Warren Buffett’s Q4’2023 portfolio and picked stocks that have seen a significant insider buying activity since mid-2023 through March 6, 2024. We picked only those stocks that were bought by directors, officers and executives. These are the stocks in which Warren Buffett has significant stakes and they also saw strong insider buying activity. Some of the top names in the list include Bank of America Corp (NYSE:BAC), Mastercard Inc (NYSE:MA) and Snowflake Inc (NYSE:SNOW). With each stock we have mentioned Buffett’s stake as of the end of 2023. Why do we pay attention to what hedge funds are buying? Hedge funds’ top 10 consensus stock picks outperformed the S&P 500 Index by more than 140 percentage points over the last 10 years (see the details here).
10. Liberty Latin America Ltd Class A (NASDAQ:LILA)
Warren Buffett’s Stake: $9,424,707
Liberty Latin America Ltd Class A (NASDAQ:LILA) ranks 10th in our list of the stocks Warren Buffett and insiders are crazy about. Liberty Latin America Ltd Class A (NASDAQ:LILA) CEO Balan Nair bought 16,313 shares of Liberty Latin America Ltd Class A (NASDAQ:LILA) at $6.14 per share on February 26, when the stock was trading at around $6.13. As of March 6 the stock was trading at around $6.28. This means since Liberty Latin America Ltd Class A's (NASDAQ:LILA) CEO bought the company shares the stock has gained about 2.45%.
Warren Buffett’s Berkshire Hathaway owns a $19.2 million stake in the telecom company Liberty Latin America Ltd Class A (NASDAQ:LILA). Over the past one year the stock has lost about 30% in value.
Last month, during its latest earnings call, the company talked about guidance and gave key business updates:
"Additionally, we remain focused on volume growth and improving our pricing effectiveness through utilization of AI tools and capabilities, which should underpin our top line expansion in 2024. Importantly, we are near the finish line in Puerto Rico and are looking forward to inflecting the business in H2 and driving improved financial performance on the back of cross sell activities, more compelling CVPs and cost rationalization, including the elimination of the AT&T TSA expenditures. As Balan said, Puerto Rico is a tale of two halves. We will get through the migration and the team is poised to launch strong commercial plans in the second half. Inorganically, we had two key announcements in 2023 – our tower modernization, which unlocks capital and enhances flexibility across the group, and the DISH transaction which upon expected close in 2024 should further strengthen our Puerto Rico business and help us further accelerate our mobile growth.
In terms of capital deployment, we continue to shrink our equity in 2023 and reduce the outstanding principal on our LLA convertible bond. We expect to see more of that in 2024, including the repayment of the remaining outstanding balance of the convertible bond this summer. Wrapping up, we delivered 2023 growth in terms of adjusted OIBDA and adjusted FCF before partner distributions, which is a solid result when viewed across the industry and the overall business climate across the region."
Read the full earnings call transcript here.
9. Lennar Corp (NYSE:LEN)
Warren Buffett’s Stake: $20,452,277
Amy Banse, a director at Lennar Corp (NYSE:LEN), started amassing Lennar shares in June 2023 and continued her buying spree until October 2023. In her latest transaction, on October 13, she bought 920 shares of Lennar Corp (NYSE:LEN) at $108.71 per share. Since then, the stock has gained about 45.94% through March 6, 2024.
Warren Buffett also loves the home construction company. Berkshire Hathaway owns a $20.5 million stake in Lennar Corp (NYSE:LEN) as of the end of 2023. Warren Buffett started buying shares in Lennar Corp (NYSE:LEN) in the second quarter of 2023.
As of the end of the fourth quarter of 2023, 65 hedge funds out of the 933 funds tracked by Insider Monkey had stakes in Lennar Corp (NYSE:LEN).
8. Sirius XM Holdings Inc (NASDAQ:SIRI)
Warren Buffett’s Stake: $220,129,527
Jennifer C. Witz, the CEO of Sirius XM Holdings Inc (NASDAQ:SIRI), snapped up 250,000 shares of the media and radio company in August 2023 at $4.11 per share. Since then the stock has gained about 1.7%
As of the end of 2023, Warren Buffett’s Berkshire Hathaway owns a $220 million stake in Sirius XM Holdings Inc (NASDAQ:SIRI). Over the past one year Sirius XM Holdings Inc (NASDAQ:SIRI) shares have lost about 3% in value.
Like Sirius, Warren Buffett is also long Bank of America Corp (NYSE:BAC), Mastercard Inc (NYSE:MA) and Snowflake Inc (NYSE:SNOW).
7. Paramount Global Class B (NASDAQ:PARA)
Warren Buffett’s Stake: $936,539,643
Shari Redstone, the daughter of media magnate Sumner Redstone, is the non-executive chairwoman of Paramount Global Class B (NASDAQ:PARA). She bought 165,000 shares of Paramount Global Class B (NASDAQ:PARA) in May 2023 at $15.06 per share. At that time the stock was trading at around $14.95, while as of March 6 the stock price was $10.21. This shows that during this time the stock fell about 46%.
Warren Buffett decreased his stake in Paramount Global Class B (NASDAQ:PARA) by 33% in the fourth quarter of 2023, ending the period with a $937 million stake in Paramount Global Class B (NASDAQ:PARA).
6. Aon PLC (NYSE:AON)
Warren Buffett’s Stake: $1,193,182,000
Management consulting firm Aon PLC (NYSE:AON) ranks sixth in our list of the stocks Warren Buffett and insiders love. On February 7 Lester B. Knight, a board member at Aon PLC (NYSE:AON), bought 25,000 shares of Aon PLC (NYSE:AON) at $301.97 per share. Over the past one month the stock has gained about 4.8%.
As of the end of the fourth quarter of 2023, Warren Buffett’s Berkshire owns a $1.2 billion stake in Aon PLC (NYSE:AON). In addition to AON, Warren Buffett also loves Bank of America Corp (NYSE:BAC), Mastercard Inc (NYSE:MA) and Snowflake Inc (NYSE:SNOW).
Aon talked about guidance and future plans in its latest earnings call:
"Looking forward, we expect to deliver margin expansion in 2024 and over the long-term, as we continue our track-record of cost discipline and managing investments in long-term growth on ROIC basis. We expect restructuring savings will fall to the bottom-line and contribute to full-year adjusted operating margin expansion. Restructuring actions completed in 2023 are expected to generate $70 million of run-rate savings in 2024. At this time, we continue to expect a $100 million of run-rate savings in 2024 as we continue to execute against our plans at Aon Business Services and our business. As we’ve previously communicated, we conservatively modeled the expected acquisition of NFP to close mid-year 2025.
While the combined adjusted operating margin will initially be lower than Aon standalone, we expect over time to continue to improve Aon’s overall margins through operational improvement and the impacts from previously communicated cost synergies. Turning to EPS. Adjusted EPS was flat in Q4. Operating income grew 10%, but was offset by a headwind from a higher tax-rate in the quarter and non-operating expense. For the full-year, organic revenue growth and margin expansion translated into adjusted EPS growth of 6%, overcoming a headwind from non-operating expense. I’d note, the change in other non-operating expense had a $0.15 per share or 4% unfavorable impact in Q4 and a $0.98 per share or 7% unfavorable impact for the full-year."
Read the full earnings call guidance here.
Polen Global Growth Strategy stated the following regarding Aon plc (NYSE:AON) in its fourth quarter 2023 investor letter:
“AON PLC’s (NYSE:AON) stock price underperformed this past quarter following the announcement of the company’s acquisition of NFP, a middle market insurance broker, for $13 billion. Though the deal complements Aon’s current business, it is expected to be dilutive to earnings in the near term, prompting a sell-off in the shares. We will continue to assess the merits of the NFP transaction, but it does not currently change our long-term view of Aon, which we view as a steady, durable, low-teens earnings compounder.”
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Disclosure. None. 10 Stocks Warren Buffett and Insiders Are Crazy About was initially published on Insider Monkey.