Wall Street Watches for Big Moves: Key Insights from Recent 13F Filings

In a significant moment for investors, the critical disclosure period for institutional investors recently closed. The results shed light on key stock strategies, especially those driven by renowned figures like Warren Buffett.

On November 14, institutional investors managing at least $100 million in assets were required to submit Form 13F to the Securities and Exchange Commission (SEC). This filing reveals which stocks major money managers bought or sold over the past quarter.

While 13Fs aren’t perfect—they can be up to 45 days late in reporting—these documents provide valuable insights into the stock choices that grab the attention of leading asset managers. Understanding these trends is essential for informed investment decisions.

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Among the most highly anticipated 13F disclosures belongs to Berkshire Hathaway, the company led by the investor known as the “Oracle of Omaha.” Both professional and everyday investors are eager to learn about Buffett’s latest stock moves.

However, the filing period also highlights other prominent investors, including Terry Smith of Fundsmith, often dubbed “Britain’s Warren Buffett.” His investment philosophy revolves around identifying exceptional companies that might not be on everyone’s radar.

As of the end of September, Fundsmith managed over $25 billion spread across 40 stocks, but two specific stocks have recently captured Smith’s interest heading into the new year.

Apple’s Continued Appeal

Despite reducing many holdings this year, Terry Smith has significantly increased his investments in tech giant Apple (NASDAQ: AAPL). Since January, he has acquired 224,004 shares, marking a 17% increase in just nine months.

Apple’s strong customer loyalty, driven by its iconic brand and innovative products, makes it a favorite among investors. Longtime customers often stick with Apple’s ecosystem, ensuring steady sales.

Recent strategic shifts under CEO Tim Cook have aimed to enhance subscription services, diversifying revenue streams beyond traditional product sales. This could stabilize income during fluctuating iPhone upgrade cycles and enhance profit margins over time.

Additionally, Apple’s aggressive share repurchase program started in 2013 has led to the buyback of $700.6 billion in stock, reducing outstanding shares by over 42%. For companies like Apple that have steady profits, buybacks can significantly improve earnings per share (EPS), bolstering its stock attractiveness.

However, Smith’s interest in Apple raises questions about valuation. The stock currently trades at 39 times its trailing-12-month EPS and 32 times the projected EPS for fiscal 2025, which is quite high, especially with Apple’s recent growth in product sales facing challenges.

Another potential concern involves tariffs. President-Elect Donald Trump has indicated a possible 35% tariff on Chinese imports, which could impact Apple’s profitability given its reliance on Chinese manufacturing.

Image source: Getty Images.

Texas Instruments: A Surprising Choice

Another stock that caught Terry Smith’s attention is Texas Instruments (NASDAQ: TXN). Fundsmith didn’t hold Texas Instruments shares as of the start of 2024, but by the end of September, they had acquired 1,700,630 shares, making it their 20th largest position by market value.

Investors see promise in Texas Instruments, especially with the U.S. economy’s resilience despite recession fears. The cyclical nature of semiconductor stocks means they often thrive when the economy is strong. Historical data suggests growth periods tend to last much longer than recessions, favoring long-term investors like Smith.

Like Apple, Texas Instruments has a solid capital-return strategy. The company’s board approved a $15 billion share repurchase program in 2022 and has increased its annual dividend for 21 consecutive years. Currently, Texas Instruments offers a yield of 2.7%, significantly higher than the S&P 500 average. Investor confidence can grow from a reduced share count, which boosts EPS figures.

Yet, there are reasons to question Smith’s Texas Instruments investment. The company has ramped up capital expenditures (capex) in attempts to enhance chip production capabilities. Recent market conditions, however, have created challenges, leading to a supply excess and highlighting increased costs that have hampered free cash flow.

Furthermore, while Smith is known for valuing bargains, Texas Instruments trades at about 35 times forward earnings, making it less appealing at this time. A shift in strategy towards free cash flow could improve the valuation if executed correctly, but current conditions suggest the price may be too high.

Opportunity Awaits Investors

Have you ever felt that you missed out on investing in standout stocks? If so, you might find this news compelling.

Occasionally, analysts recommend a “Double Down” on stocks they believe are about to experience significant growth. If you’re worried about missing your chance, now could be the ideal time to invest based on these insights.

• Nvidia: A $1,000 investment in 2009 would now be worth $358,460!*
• Apple: Invest $1,000 in 2008 and it could grow to $44,946!*
• Netflix: An investment of $1,000 in 2004 would have appreciated to $478,249!*

Currently, investors can seize the opportunity with three newly identified “Double Down” stocks, potentially making this an excellent time to invest.

See 3 “Double Down” stocks »

*Stock Advisor returns as of December 2, 2024

Sean Williams has no position in any of the stocks mentioned. The Motley Fool has positions in and recommends Apple, Berkshire Hathaway, Nvidia, and Texas Instruments. The Motley Fool has a disclosure policy.

The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.