Knowing when it's time to buy stocks has made Warren Buffett, George Soros, and Steven A. Cohen billions of dollars, so tracking their investment activity can be a savvy move. Each of these billionaires is required to file a quarterly 13-F report with the SEC disclosing their activity, and I read through their reports and came away thinking that now is a good time to pick up shares in Store Capital (NYSE:STOR), General Mills (NYSE:GIS), and International Game Technology (NYSE:IGT)Are these stocks right for your portfolio? Read on to find out.
Capital costs are climbing, but this company's dividend is too hard to resist
Buffett's never one to buy a stock simply because it pays a dividend, but he's more than willing to own dividend-paying companies if they're run by proven management teams and he can acquire shares at bargain prices.
3 Stocks Billionaires Are Buying Now
Store Capital, General Mills, and International Game Technology are top stocks that Warren Buffett, George Soros, and Steven Cohen, respectively, are buying.
Todd Campbell (TMFEBCapital) Aug 28, 2017 at 7:01AM
Knowing when it's time to buy stocks has made Warren Buffett, George Soros, and Steven A. Cohen billions of dollars, so tracking their investment activity can be a savvy move. Each of these billionaires is required to file a quarterly 13-F report with the SEC disclosing their activity, and I read through their reports and came away thinking that now is a good time to pick up shares in Store Capital (NYSE:STOR), General Mills (NYSE:GIS), and International Game Technology (NYSE:IGT)Are these stocks right for your portfolio? Read on to find out.
Capital costs are climbing, but this company's dividend is too hard to resist
Buffett's never one to buy a stock simply because it pays a dividend, but he's more than willing to own dividend-paying companies if they're run by proven management teams and he can acquire shares at bargain prices.
Warren Buffett speaks to someone in a convention hall.
IMAGE SOURCE: GETTY IMAGES.
The latest example is Store Capital, a real estate investment trust that owns free-standing buildings and leases them to service companies.
Earlier this year, concerns that rising interest rates would crimp profit and e-commerce would force its tenants out of business sent Store Capital's shares tumbling. That drop provided Buffett's Berkshire Hathaway with a perfect opportunity to buy low.
Berkshire Hathaway portfolio manager Ted Weschler has been kicking Store Capital's tires since 2014, but it wasn't until the sell-off in its shares that Berkshire reached out to Store Capital's management with an offer to acquire nearly 10% of it. Store Capital jumped at the opportunity, selling Berkshire Hathaway 18.6 million shares at $20.25 per share.
Berkshire Hathaway was probably interested in Store Capital because while it isn't immune to the drag on profitability associated with rising costs of capital or the threat of e-commerce, it's arguably better positioned than many of its peers are.
Its senior leadership has been investing in single-tenant real estate for over 35 years, and Store Capital's real estate portfolio includes 1,660 properties run by 360 customers in 48 states. Store Capital's tenants include restaurants, early childhood education, and movie theaters, which are less at risk of losing market share to e-commerce. Less than 20% of its real estate is traditional retail, and many of those retail clients serve markets where shopping in-person still trumps e-commerce, including furniture, crafting, and outdoor sports.
Furthermore, 97% of Store Capital's leases include mandatory reporting of unit financials, allowing Store Capital to make sure its locations are profitable and unlikely to close. Leases are usually long-term, and they include rent escalators, so there's a good amount of clarity into future revenue and cash flow. Profitability is helped by the company's focus on investments that cost them less than replacement cost, and it charges below comparable rents to shore up tenancy.
The end result of Store Capital's strategy is a business model that's inspired Berkshire Hathaway's envy. Perhaps it should inspire your envy too, especially since a 7.4% dividend increase last year means that its shares are yielding a Treasury-beating 4.8%.
https://www.fool.com/investing/2017/08/28/3-stocks-billionaires-are-buying-now.aspx