3 Stocks Warren Buffett Bought Faster Than Other Billionaire Managers

If billionaire Warren Buffett has proven anything as CEO of Berkshire Hathaway (BRK.A 0.73%) (BRK.B 0.74%) for almost six decades, it's that he can create wealth. Berkshire Hathaway Class A (BRK.A) stock has doubled the annual total return, including dividends, of the benchmark S&P 500 since the mid-1960s (19.8% vs. 9.9%).

But just because billionaires succeed on Wall Street doesn't mean they all agree.

Apple

One stock that Warren Buffett absolutely can't get enough of is Apple (AAPL) , which he called "a better company than any other we own" at Berkshire Hathaway's annual shareholder meeting. During the first quarter, 13F documents show that Buffett's company added more than 20.4 million shares of the tech giant, boosting Berkshire's position to nearly 915.6 million shares.

However, most billionaire investors were reducing their burden on Apple by early 2023. A total of five billionaire investors were busy selling while Buffett and his team were buying, including:

Ken Fisher at Fisher Asset Management
Jim Simons at Renaissance Technologies
Ken Griffin at Citadel Advisors
Israel Englander at Millennium Management
Jeff Yass at Susquehanna International

In the same order they were listed above, these billionaires dumped approximately 7.52 million shares, 7.09 million shares, 5.12 million shares, 2.22 million shares, and 1.1 million Apple shares in the quarter ended in March.

The most likely reason we've seen a number of prominent billionaire fund managers head for the exit is Apple's valuation. Even with historically high inflation as a tailwind, modest iPhone 14 sales and lower sales of Apple's personal Macs are expected to push Apple's fiscal 2023 sales and profits down by a small single-digit percentage.

While Apple has been fairly consistently valued in the junior to mid-teens range between 2013 and 2018, in terms of value for money, investors are now paying 31 times Wall Street's FY 2023 consensus earnings for the company. , which is not growing.

On the other hand, Apple has historically led the way with its innovation. Apple's ever-growing services segment could eventually surpass the iPhone as the company's biggest earner.

In addition, Apple's capital return program is second to none. Although the dividend yield is not much to look at, its nominal dollar annual payout is one of the largest in the world. In addition, the company has repurchased $586 billion of its common stock over the past 10 years.

Occidental Petroleum

The second block of stock the Oracle of Omaha is buying up for a Berkshire Hathaway investment portfolio that other billionaire investors aren't too keen on is Occidental Petroleum (OXY) oil stocks. Since early 2022, Buffett and his deputies have increased Berkshire's share of common stock in Occidental to just under 222 million shares.

But according to Form 13F filed with the Securities and Exchange Commission in the first quarter, three billionaires were active sellers of Occidental stock, including:

Ken Griffin of Citadel Advisors
Jim Simons of Renaissance Technologies
Stephen Cohen of Point72 Asset Management
Griffin fund dumped approximately 2.63 million shares; The Simons Fund sold its entire stake of 2.43 million shares; and Cohen's Point72 jettisoned about 1.3 million shares of Occidental Petroleum.

There seem to be two reasons why we see such a divergence of opinion between Warren Buffett and other billionaire investors. First, Occidental's revenue stream. Although it is an integrated operator—in addition to being a drilling company, it owns downstream assets such as chemical plants—the company derives most of its revenue from drilling. If the spot price of West Texas Intermediate (WTI) oil declines, Occidental's operating cash flow will be more vulnerable than most other drilling companies.

Another issue is with Occidental's balance sheet. Even with WTI rising in 2022, which allowed the company to pay off some of its debt, Occidental still closed March 2023 with $19.6 billion in net debt.

The potential Warren Buffett and his team likely see in Occidental Petroleum is in the global energy supply chain. Russia's invasion of Ukraine, combined with three years of capital underinvestment due to pandemic-related uncertainty, should make it difficult to increase global oil supplies anytime soon. A market where oil supply is tight is generally positive for the spot price of crude oil and, as noted, Occidental's operating cash flow is heavily dependent on its high-margin drilling segment.

Paramount

The third stock that Warren Buffett has been buying up while other billionaire investors are selling is aging media company Paramount Global (PARA). Berkshire Hathaway added a modest 93,786 shares of Paramount shares in the quarter ended March, raising its stake to about 93.73 million shares.

While Buffett and his team were hitting the buy button, three of Wall Street's brightest billionaire wealth managers were cutting their positions at Paramount, including:

Jim Simons of Renaissance Technologies
Ken Griffin of Citadel Advisors
Israel Englander of Millennium Management
In order, Simons, Griffin and Englander led the sale of approximately 2.87 million shares, 2.31 million shares and 2.17 million shares of Paramount Global in the quarter ending in March.

If you're looking for a reason to be pessimistic about Paramount, ad spending is a no-brainer. Traditional TV segments of traditional media companies are still heavily dependent on advertising revenue. However, advertising spending has been on the decline for more than a year in anticipation of a weaker economic outlook driven by rapidly rising interest rates.

Another potential concern could be Paramount's significant direct loss to consumers. Despite rapid growth in Paramount+'s subscriber base and even a double-digit increase in ad revenue in the streaming segment, rising losses are a major concern for investors.

However, there is a potential light at the end of the tunnel for Paramount. In addition to Paramount+ steadily growing subscriber numbers, Pluto TV reached 80 million monthly active users in the quarter ending March. Pluto TV is the #1 ad-supported free streaming service in the country. If US economic growth goes downhill, viewers may turn to Pluto TV.