Buy These to Invest Like a Billionaire
NEW YORK ( MainStreet) The top ten companies with the most billionaire investors include Apple Inc. (AAPL), Google (GOOG), El Paso Energy (EPG), News Corp (NWS), Medco Health Solutions (SOLU), Microsoft (MSFT), Wells Fargo (WFC), SPDR Gold Trust (GLD), Yahoo (YHOO) and Anadarko Petroleum Corp. (APC), according to research from Insiders Circle International.
"Billionaires invest in companies that have great long term outlooks," said Mike Warren, entrepreneur, financial advisor and author of Guerrilla Credit: Learn the Unconventional Ways to Get Cash for Your Business Today (On the Inside Press 2013). "Tech and finance are where it's at because they solidly outperform the S&P 500."
The average investor can track the investments of billionaires with indexes, such as iBillionaire and the Guru Index ETF.
Weighted toward some of the larger blue chip companies like Coca-Cola and American Express as well as NASDAQ performers Priceline and Netflix, the iBillionaire Index mimics the best investments of market billionaires such as Warren Buffett, Carl Icahn, Daniel Loeb and David Einhorn while the Guru Index ETF more simply invests in the single largest holdings of 68 of the top hedge funds, such as CQS Cayman, Elliot Management, Fortress Investment Holdings, GLG Partners, Greenlight Capital, Lansdowne Partners, Paulson and Co. Pershing Square Capital, Tiger Global and Third Point run by Dan Loeb.
"The GURU ETF makes it possible for the little investor with portfolios of $1 million or less to invest just like a hedge fund but at lower costs," said Warren, who is a financial advisor with Insiders Circle International.
AlphaClone Alternative Alpha ETF, Schwab U.S. Large-Cap Value ETF and the Vanguard Value ETF are other investments to explore to invest like a billionaire.
"Looking at Warren Buffet as an example of a billionaire investor, and the returns he gets shows that he focuses on good company fundamentals as part of his investing strategy," Warren told MainStreet. "The focus has paid off with Buffet's Berkshire Hathaway averaging 25% annualized returns since 1976. Follow what he does and you are sure to succeed."
Launched more than a year ago in May 2012, the AlphaClone Alternative Alpha ETF has $30 million in assets under management and has returned 48.4% since inception and 32.4% year to date through December 4, 2013, according to Morningstar.
It does not pick a random subset of managers like the iBillionaire Index but rather invests in the top positions of hedge fund managers who provide persistent returns over a long period.
"Hedge fund managers we follow who have high scores tend to be fundamental bottom-up investors with relatively long track records," said Maz Jadallah, CEO and founder of AlphaClone.
The ETF tracks more than 450 hedge funds and institutional investors, including Meryl Witmer's Eagle Value Partners, Seth Klarman's Baupost Group and David Tepper's Appaloosa Capital.