No one gets it right all the time, and that includes the
world's greatest investors.
To continually calibrate price and time without fail is
impossible. Every investor has been annoyed at seeing the share
price drift lower after a purchase.
Markets are unpredictable over the short term, but if the
analysis is correct, the stars will eventually align: share price
will rise and wealth will be realized. You don't become a
billionaire if the stars fail to align much more often than
I occasionally parse the financial press to see what stocks
billionaires are buying. That said, I never blindly dive into a
stock because someone - no matter how wealthy - has bought it.
But worthy investment ideas are occasionally generated. If I can
exploit that idea at a better price than the billionaire, all the
I've found a couple quality investment ideas that deliver
periodic payments and are owned by two of the world's greatest
investors. Better yet, you can get in on their income ideas at a
discount to their latest purchase price.
If you can buy a stock cheaper than Warren Buffett, you should
at least look at that stock. Buffett's
Berkshire Hathaway (NYSE: BRK.a)
has bought over 68 million shares of
International Business Machines (
And that translates to roughly 6% of the company's shares.
Buffett's been accumulating IBM shares over the past couple
years. His most recent purchase occurred during the fourth
quarter of 2012, where he added to his holdings at an average
price of $195. Today, IBM trades around $181 a share, a 7%
discount to Buffett's purchase price.
You might think of IBM as your grandfather's tech stock,
but it keeps moving forward. The company is a leader in IT
infrastructure, the stuff that keeps data flowing within a
company. It's also making inroads in the sexier fields of mobile
communications and cloud computing.
IBM isn't a high-yield stock, yielding just over 2%. But come
hell or high water, that dividend keeps moving forward.
Similarly, another billionaire investor has also been on a
recent buying spree. George Soros doesn't dominate
headlines like Warren Buffett, but his record is similarly
impressive. His $20-billion fortune puts him at No. 30 on the
Forbes 400 list.
Soros has taken a shine to retailing. He recently accumulated
large positions in
J.C. Penney (
. I prefer the latter to the former: J.C. Penney is a
non-dividend-paying basket case; Macy's is a solid dividend
Macy's is also an old upscale brand with its own name and with
Bloomingdale's. This isn't to say it's stodgy. It's not above
pursuing relationships with hip retailers like
Finish Line (
to develop the popular store-within-a-store-concept that draws
customers these days.
Like IBM, Macy's keeps moving forward. Over the past 10 years,
revenue has nearly doubled to $27.8 billion from $15.6 billion.
As for the dividend, it keeps moving forward as well. Over the
past 10 years, the dividend has grown at a 16% average annual
rate. The latest increase, which occurred in June was even more
impressive at 25%.
George Soros paid an average $46.44 a share for his Macy's
position in the second quarter of 2013. Today, you can buy the
same stock at roughly a 10% discount.
Of course, no investment is guaranteed. But when legendary
investor pours into an investment that adheres to my
income-oriented philosophy toward, I take notice. And I sometimes