You're not alone in wondering what the world's best investors purchase and sell. Fortunately, learning from the professionals is perhaps easier than you think. We need only look to see what billionaires buy and sell. The SEC requires money managers with $100 million or more to report their trading activity every three months.
Billionaire money managers may teach everyday investors a lot, but not all of their bets win. A closer look at two billionaire-favored stocks from Q4 2023.
Amazon Amazon (NASDAQ: AMZN) shares rose 81% last year. Billionaire money managers buying the stock hand over fist contributed to the rise. In Q4, Ken Griffin of Citadel Advisors bought almost 4.3 million shares, and James Simons of Renaissance Technologies bought nearly 4.3 million.
Amazon's stock rose this year as e-commerce profits rose in 2023. From a loss of $2.8 billion in 2022, North American operating profits rose to $14.9 billion last year.
Amazon leads U.S. e-commerce, yet it has opportunity to grow. Retail sales in the fourth quarter totaled $1.83 trillion, according to the Commerce Department. E-commerce sales climbed twice as quickly as retail, but just 15.6%.
Amazon is rapidly expanding into other major addressable markets. Last year, Amazon Web Services sales rose 13% to $90.8 billion. According to Gartner, global cloud services investment would rise 20.4% to $679 billion this year.
Duolingo Language learning specialist Duolingo (NASDAQ: DUOL) was the fourth-quarter growth stock billionaires bought second. Millennium Management's Israel Englander bought 178,357 shares in the fourth quarter, fivefolding its holdings. John Overdeck and David Siegel of Two Sigma Advisors and Two Sigma Investments added 277,983 shares to significant stakes.
Duolingo's smartphone app is exploding in popularity. The site recorded 26.9 million daily active users in Q4 2023, up 65% from the previous year. Due to new international pricing, many Duolingo free users subscribe to paying memberships while conversions increase. The company had 6.6 million paid members in 2023, up 57% from the year before.
Social-first marketing helps Duolingo sustainably recruit new users, which impresses growth stock investors. Its viral videos featuring its huge green owl cost little but get millions of views. Sales and marketing expenses rose 13% last year, but gross profit rose 44%.
Duolingo stock is overvalued at 64 times 2024 earnings. That means investors who buy at recent levels could lose a lot if the company's bottom line doesn't improve quickly for a few years. Some investors may be willing to take this risk, while others may prefer to wait for a better price on this volatile growth stock.
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