15 Undervalued S&P 500 Stocks Billionaires Are Loading Up On
In this article, we will take a detailed look at the 15 Undervalued S&P 500 Stocks Billionaires Are Loading Up On. For a quick overview of such stocks, read our article 5 Undervalued S&P 500 Stocks Billionaires Are Loading Up On.
The CPI report on December 12 has yet again lifted investors’ hopes that the Fed’s efforts against inflation might be working. But the open secret is that it would take something more than this to calm investors' nerves about the future. David M. Lebovitz from JPMorgan talked to Bloomberg about the latest report and said that while the report was positive, all eyes would be on the state of the labor market and any “signs of cracks” there would convince the Fed to change its course of action (to start lowering rates) quicker. Lebovitz categorically said that he does not expect recession in 2024.
Julian Emanuel from Evercore ISI recently talked to CNBC about Evercore’s 2024 market outlook report. The firm expects the S&P 500 to touch 4,750 in 2024 by the year-end, which shows a very limited upside from the current levels. While Emanuel said that he believes 2023 saw the last rate hike of the Fed’s rate-hike cycle, he believes there’s “enough tightening” in the pipeline. The analyst sees a mild recession in 2024 and said that the coming months would test investors’ patience where they would be tempted to sell low and buy high. The analyst recommended investors not to give in to this temptation and practice patience to be rewarded in the long term.
Evercore ISI believes the S&P 500 would fall to 3,970 in the first half of 2024 and would rebound in the second half of the year, driven by decline in inflation.
Photo by AlphaTradeZone
Methodology
For this article we first used a stock screener to identify S&P 500 companies trading at PE ratios under 15 as of December 12. From this list we selected 15 stocks with the highest number of billionaire investors. We used Insider Monkey's proprietary database of billionaire-owned stocks to find out the number of billionaire investors for these companies.
15. Marathon Petroleum Corp (NYSE:MPC)
Number of Billionaire Investors: 15
Marathon Petroleum Corp (NYSE:MPC) shares have gained about 29% over the past one year. A total of 15 billionaires in Insider Monkey’s database had stakes in the energy company Marathon Petroleum Corp (NYSE:MPC) as of the end of the September quarter. Among the notable billionaires having stakes in Marathon Petroleum Corp (NYSE:MPC) are Paul Singer, Cliff Asness and Israel Englander.
In October, Marathon Petroleum Corp (NYSE:MPC) posted third quarter results. Adjusted EPS in the quarter came in at $8.14, beating estimates by $0.39. Revenue in the period fell 12% year over year to $41.58 billion, surpassing estimates by $2.61 billion.
14. DR Horton Inc (NYSE:DHI)
Number of Billionaire Investors: 15
Home construction company DR Horton Inc (NYSE:DHI) ranks 14th in our list of the most undervalued S&P 500 stocks billionaires are loading up on.
Insider Monkey’s billionaires' database shows that 15 billionaires had stakes in DR Horton Inc (NYSE:DHI) as of the end of the September quarter. Some notable billionaires having stakes in DR Horton Inc (NYSE:DHI) include Warren Buffett, Rajiv Jain, Israel Englander and Steve Cohen.
Baron Real Estate Fund made the following comment about D.R. Horton, Inc. (NYSE:DHI) in its second quarter 2023 investor letter:
“Our investments in homebuilder companies – Toll Brothers, Inc., Lennar Corporation, and D.R. Horton, Inc. (NYSE:DHI) – performed well in the first six months of 2023. The share price of Toll Brothers increased nearly 60% and the shares prices of Lennar and D.R. Horton each gained more than 35%.
Year-to-date, each company has witnessed a meaningful uptick in demand to buy homes:
We remain optimistic about the long-term potential for the Fund’s investments in Toll Brothers, Lennar, and D.R. Horton for several reasons…” (Click here to read the full text)
13. Pioneer Natural Resources Co (NYSE:PXD)
Number of Billionaire Investors: 16
Pioneer Natural Resources Co (NYSE:PXD) ranks 13th in our list of the undervalued S&P 500 stocks bought by billionaires. Earlier this year Pioneer Natural Resources Co (NYSE:PXD) made headlines after oil giant ExxonMobil agreed to buy Pioneer Natural Resources Co (NYSE:PXD) for a whopping $60 billion, which, if approved, would be the largest oil-and-gas deal in two decades.
Recently, the FTC asked Exxon and Pioneer for more information regarding the deal.
A total of 16 billionaires tracked by Insider Monkey have stakes in Pioneer Natural Resources Co (NYSE:PXD) as of the end of the September quarter.
Ave Maria World Equity Fund made the following comment about Pioneer Natural Resources Company (NYSE:PXD) in its Q1 2023 investor letter:
“Pioneer Natural Resources Company (NYSE:PXD) is one of the largest independent E&P companies in the United States focused on the Permian Basin. Pioneer is a low-cost producer in the Permian basin and can generate free cash flow when the price of oil is more than $30 per barrel. Pioneer was one of the first companies in the industry to embrace a disciplined investment framework focused on returning excess capital to shareholders during periods of high realized pricing. This framework has materially benefited shareholders given the sharp rise in the price of crude oil.”
12. ConocoPhillips (NYSE:COP)
Number of Billionaire Investors: 16
Another energy stock in our list, ConocoPhillips (NYSE:COP) stock was spotted in 16 portfolios of billionaire-led hedge funds, according to Insider Monkey’s database of 910 hedge funds. Some famous billionaires having stakes in ConocoPhillips (NYSE:COP) as of the end of the September quarter include Ken Fisher, Ken Griffin and Cliff Asness.
UBS in November issued a list of its highest conviction tactical thematic stock ideas, which the firm believes can gain in the next six to 24 months. ConocoPhillips (NYSE:COP) made it to the list as UBS believes it’s a quality stock.
“Our thematic lists reflect groups of stocks that are positioned to benefit from a common set of drivers, such as macroeconomic forces, policy changes, geopolitical events, temporary mispricings (valuations), or timely factors,” UBS said.
11. Berkshire Hathaway Inc Class B (NYSE:BRK.B)
Number of Billionaire Investors: 17
With a low PE ratio and a diverse business model, Berkshire Hathaway Inc Class B (NYSE:BRK.B) is one of the top favorite stocks of billionaires tracked by Insider Monkey. Some famous billionaires having stakes in Warren Buffett’s company Berkshire Hathaway Inc Class B (NYSE:BRK.B) are Bill Gates, Cliff Asness, Israel Englander and D. E. Shaw.
10. Exxon Mobil Corp (NYSE:XOM)
Number of Billionaire Investors: 17
Oil giant Exxon Mobil Corp (NYSE:XOM) has been on the radar of elite investors for decades. Exxon Mobil Corp (NYSE:XOM) recently said it plans to up its share buyback program to a whopping $20 billion per year, beginning Exxon Mobil Corp’s (NYSE:XOM) closure on its deal to buy Pioneer Natural Resources early next year through 2025.
A total of 17 billionaire-led hedge funds tracked by Insider Monkey had XOM in their portfolios as of the end of September. Some notable billionaires having stakes in Exxon Mobil Corp (NYSE:XOM) are Ken Fisher, Rajiv Jain Cliff Asness and D. E. Shaw
9. Bank of America Corp (NYSE:BAC)
Number of Billionaire Investors: 17
Bank of America Corp (NYSE:BAC) ranks 9th in our list of the undervalued S&P 500 stocks billionaires are piling into. A total of 17 billionaire-led hedge funds had stakes in Bank of America Corp (NYSE:BAC) as of the end of the September quarter. Some famous billionaire hedge fund managers having stakes in Bank of America Corp (NYSE:BAC) include Warren Buffett, Ken Fisher and Cliff Asness.
Diamond Hill Select Strategy made the following comment about Bank of America Corporation (NYSE:BAC) in its Q2 2023 investor letter:
“Other bottom contributors included SunOpta, Bank of America Corporation (NYSE:BAC) and Texas Instruments. Bank of America (which we added to the portfolio in Q2) is among the US’s largest banks. Shares were pressured during the quarter against a still-challenging backdrop for banks, particularly as investors fret about rising deposit costs and the values of some longer-duration assets in a rising-rates environment.”
8. CVS Health Corp (NYSE:CVS)
Number of Billionaire Investors: 17
Pharmacy retailer CVS Health Corp (NYSE:CVS) earlier in December upped its dividend by 9.9%. CVS Health Corp (NYSE:CVS) also reaffirmed its 2023 guidance and gave 2024 guidance at an investor event earlier this month. For 2023, CVS Health Corp (NYSE:CVS) expects $351.5 billion to $357.3 billion in revenue and $8.50–$8.70 in adjusted earnings per share. For 2024, it expects revenue to reach $366.0 billion and adjusted EPS to touch $8.50.
As of the end of the September quarter, 17 billionaires had stakes in CVS Health Corp (NYSE:CVS). Some notable billionaires having stakes in CVS Health Corp (NYSE:CVS) include Cliff Asness, Ray Dalio and Ken Griffin.
Patient Capital Management made the following comment about CVS Health Corporation (NYSE:CVS) in its Q3 2023 investor letter:
“Our largest new position was CVS Health Corporation (NYSE:CVS). We owned CVS in 2021 through call options, which provided a handsome return. We sold it when it reached our assessment of intrinsic value. In the first half of the year, the stock traded down nearly 40% from its highs. CVS is valued like a pharmacy business in secular decline, while its strategy and assets are far better. CVS owns a healthcare benefits business (Aetna) and a pharmacy-benefits manager (Caremark). It recently acquired Signify Health and Oak Street Health, entering the In-Home Evaluations and primary care spaces enhancing the company’s ability to offer comprehensive healthcare services as we transition to a system more focused on value-based care. Short-term headwinds, such as an unwind from COVID, some unfavorable health care developments and negative headlines from PBM contract losses, weighed on the price. The company is again significantly undervalued, with a trough-level 8.2x P/E multiple well below peers’ 12.2x, with a 3.5% dividend yield. We saw an opportunity to diversify the portfolio with a stable company with a promising strategy and group of assets at an attractive price.”
7. Citigroup Inc (NYSE:C)
Number of Billionaire Investors: 17
Citigroup Inc (NYSE:C) is one of the most undervalued S&P 500 stocks loved by billionaires. Insider Monkey’s proprietary database shows that 17 billionaire-managed hedge fund had stakes in Citigroup Inc (NYSE:C).
Citigroup Inc (NYSE:C) has launched major layoffs to cut costs and simplify its business structure. In November, Citigroup Inc (NYSE:C), according to a Bloomberg report, eliminated 300 senior manager roles.
Citigroup Inc (NYSE:C) in its Q3 earnings call said it will give 2024 guidance in the Q4 results. But Citigroup Inc’s (NYSE:C) management talked about the major trends it is seeing and a rough outlook on the things to come:
“We’ll continue to benefit from higher rates across currencies. I think we’ll continue to see benefits from card interest-earning balance growth. Recall that when you look at our U.S. dollar IRE position, it’s relatively neutral at this point. And interest-earning balance growth is expected to be driven by continued card spend and lower payment rates. And so I think what’s important to remember as it relates to our business is that it’s global that we’ve got, while you’re right in that on the U.S. dollar side, we’ve seen betas kind of reach — particularly for our corporate clients reach terminal levels at the end of last year.
On the non-U.S. dollar side, betas run lower, they lag and there’s still upside there because it’s a different rate curve and a different pace of increases. And so those will be some of the puts and takes to think about volumes, the rates, the speed of the curve moves and then how betas evolve, that will kind of factor in. And then the final thing to remember is that in our NII, we show it both with and without markets. On the ex-markets, we’ll have the impact of the drag from the exits of the countries that kind of play out. So we just exited Taiwan, that’s going to impact, obviously, the next quarter’s NII.”[read the full earnings call transcript]
Here is what Silver Beech Capital has to say about Citigroup Inc. (NYSE:C) in its Q3 2023 investor letter:
“Citigroup (“Citi”) is a large-capitalization global diversified financial services holding company that primarily serves multinational institutional and high net worth consumer clients. Citi is one of three large American banks to be designated in “bucket 3 or 4” of the “global systemically important bank” (“G-SIB”) framework by The Basel Committee on Banking Supervision. The other banks in this group are J.P. Morgan and Bank of America.
As a G-SIB, Citi is subjected to increased regulatory supervision by global bank regulators and central banks. Enhanced regulatory supervision was an important post-crisis reform to strengthen the global financial system by increasing bank capital ratios, transparency, and decreasing risk-taking. These reforms resulted in the largest G-SIBs moving away from risk-oriented banking activities such as advisory, high-yield lending, and trading, towards lower-risk activities. Indeed, Citi’s most valuable, high-growth segment, Treasury and Trade Solutions, is in lower-risk and entrenched activities such as liquidity and cash management, payments, trade solutions, and automated receivables processing. In our view, somewhat unintuitively, Citi’s increased regulatory supervision contributes to the company’s less risky banking business model, and thus its attractiveness as a downside-oriented investment opportunity.
Citi’s market perception suffers from the bank’s negative historical reputation. In 2008 during the Great Financial Crisis, Citi received the most TARP funding (the largest “bailout”) of the U.S. banks. TARP funding was provided by the U.S. government to forestall a liquidity problem that threatened to become a solvency problem. More recently, Citi mistakenly used its own capital to pay lenders when acting as Revlon’s loan agent, resulting in a $400M fine by the Federal Reserve and orders to resolve internal controls (which Citi fulfilled). Citi’s large global consumer bank was assembled by prior management in the early 2000s to attract and service high-end global consumers. Unfortunately, this pivot was costly and ill-timed in the context of increasingly complex multi-jurisdictional regulation to prevent money laundering and tax evasion. The global consumer bank has been a drag on Citi’s overall performance…” (Click here to see the full text)
Read the full earnings call transcript here.
6. HCA Healthcare Inc (NYSE:HCA)
Number of Billionaire Investors: 17
HCA Healthcare Inc (NYSE:HCA) ranks 6th in our list of the undervalued S&P 500 stocks bought by billionaire hedge fund managers. Some famous billionaires having stakes in HCA Healthcare Inc (NYSE:HCA) are Ken Griffin, Ray Dalio and Israel Englander. HCA in October posted third quarter results, according to which its adjusted EPS in the period came in at $3.91, missing estimates by $0.06. Revenue in the quarter increased by about 8.3% year over year to $16.21 billion, beating estimates by $390 million. For 2023, HCA Healthcare Inc (NYSE:HCA) revised its revenue guidance to $63.5 billion to $64.5 billion from $63.25 to $64.75 billion.
A total of 17 hedge funds out of the 910 hedge funds tracked by Insider Monkey had stakes in HCA Healthcare Inc (NYSE:HCA) as of the end of the September quarter.
Diamond Hill Large Cap Strategy made the following comment about HCA Healthcare, Inc. (NYSE:HCA) in its Q3 2023 investor letter:
“Health care facilities operator HCA Healthcare, Inc. (NYSE:HCA) and medical device company Abbott Laboratories were also among our bottom contributors. Despite solid fundamental performance, HCA Healthcare experienced some share price weakness during Q3. This appears to be more a result of short-term noise and sell-side expectations rather than any significant operational or financial issues.”
Click to continue reading and see 5 Undervalued S&P 500 Stocks Billionaires Are Loading Up On.
Suggested Articles:
Disclosure. None. 15 Undervalued S&P 500 Stocks Billionaires Are Loading Up On was initially published on Insider Monkey.