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Analyzing the Funds of Five “Super Investors”
With the market usually taking a breather during the summer, it’s a great opportunity to analyze how top funds positioned their portfolios at the end of Q1 2023.
We selected five funds of various sizes, each one with a renowned investor at its helm that often has a unique outlook on the market and strategy towards building out their portfolio.
The differences in portfolio compositions underline the variety of investment strategies, showing how some of the top investors approach portfolio construction.
Berkshire Hathaway has one of the world’s best known and most successful portfolios, which has significantly outperformed the S&P 500 over the long term.
While the S&P 500 has returned 195% since 2013, Warren Buffett and Charlie Munger’s fund grew by 260% over the same time period.
Although Buffett is known for preaching diversification, almost half of Berkshire’s portfolio is all in the market’s most valuable company, Apple. The rest of the portfolio is fairly diversified with a mix of bank stocks, consumer staples like Coca-Cola and Kraft, along with oil and gas companies.
Jim Simons’ hedge fund, Renaissance Technologies, is best known for its groundbreaking use of complex mathematical models and algorithms which pioneered the practice of quantitative investing.
As a result, the hedge fund’s portfolio holdings showcase astounding diversification, with the fund’s largest holding being a 2% allocation to pharmaceutical giant Novo Nordisk.
The portfolio is split across more than 3,900 different positions, showcasing the fund’s strategy of squeezing out returns from a diverse collection of investments through its algorithm-driven, statistical arbitrage approach.
Ray Dalio’s Bridgewater Associates was one of the few hedge funds to predict and successfully navigate the 2008 financial crisis, largely thanks to its “all weather” strategy which looks to perform well in all economic environments through diversification and a risk-parity approach to asset allocation.
As a result, you see many parallels and “counterweights” in the fund’s holdings. Its largest holding of MSCI’s Emerging Markets ETF is balanced out by the Core S&P 500 ETF.
Bridgewater is also one of the few funds which holds shares in a gold ETF. While other funds we’ve looked at have investments in gold royalty companies or miners, which likely have strong balance sheets and businesses to support the investment, Dalio’s fund has preferred to invest directly in the precious metal.
Stanley Druckenmiller is best known as having been a key strategist for George Soros’s Quantum Fund, along with his own consistent record of returns with Duquesne which average 30% annually.
Known for his macroeconomic approach to investing, Druckenmiller isn’t afraid to make unique and concentrated bets when he has high conviction.
Currently his highest conviction bet and largest holding in his portfolio is Coupang Inc., which is South Korea’s largest online marketplace. Along with Coupang, Druckenmiller positioned his fund to take advantage of this year’s AI boom, with significant holdings in companies like NVIDIA, Microsoft, and Alphabet.
The smallest of all five funds we looked at, Michael Burry’s Scion Asset Management might be one of the best known for its role in predicting the 2008 financial crisis early on.
The protagonist of the film, The Big Short, Michael Burry is best known for his aggressive short bets and overall value investing approach especially in distressed assets.
Scion Asset Management’s portfolio reflects this as a good portion of its holdings at the end of Q1 this year were in various bank stocks which had declined significantly throughout the month of March.
Burry’s biggest bets however are in Chinese ecommerce companies JD.com and Alibaba, indicating Burry’s belief in a consumer driven economic reopening for China this year.
TORONTO – Canada’s main stock index was down more than 200 points in late-morning trading, weighed down by losses in the technology, base metal and energy sectors, while U.S. stock markets also fell.
The S&P/TSX composite index was down 239.24 points at 22,749.04.
In New York, the Dow Jones industrial average was down 312.36 points at 40,443.39. The S&P 500 index was down 80.94 points at 5,422.47, while the Nasdaq composite was down 380.17 points at 16,747.49.
The Canadian dollar traded for 73.80 cents US compared with 74.00 cents US on Thursday.
The October crude oil contract was down US$1.07 at US$68.08 per barrel and the October natural gas contract was up less than a penny at US$2.26 per mmBTU.
The December gold contract was down US$2.10 at US$2,541.00 an ounce and the December copper contract was down four cents at US$4.10 a pound.
This report by The Canadian Press was first published Sept. 6, 2024.
TORONTO – Canada’s main stock index was up more than 150 points in late-morning trading, helped by strength in technology, financial and energy stocks, while U.S. stock markets also pushed higher.
The S&P/TSX composite index was up 171.41 points at 23,298.39.
In New York, the Dow Jones industrial average was up 278.37 points at 41,369.79. The S&P 500 index was up 38.17 points at 5,630.35, while the Nasdaq composite was up 177.15 points at 17,733.18.
The Canadian dollar traded for 74.19 cents US compared with 74.23 cents US on Wednesday.
The October crude oil contract was up US$1.75 at US$76.27 per barrel and the October natural gas contract was up less than a penny at US$2.10 per mmBTU.
The December gold contract was up US$18.70 at US$2,556.50 an ounce and the December copper contract was down less than a penny at US$4.22 a pound.
This report by The Canadian Press was first published Aug. 29, 2024.
The crypto market has recently experienced a significant downturn, mirroring broader risk asset sell-offs. Over the past week, Bitcoin’s price dropped by 24%, reaching $53,000, while Ethereum plummeted nearly a third to $2,340. Major altcoins also suffered, with Cardano down 27.7%, Solana 36.2%, Dogecoin 34.6%, XRP 23.1%, Shiba Inu 30.1%, and BNB 25.7%.
The severe downturn in the crypto market appears to be part of a broader flight to safety, triggered by disappointing economic data. A worse-than-expected unemployment report on Friday marked the beginning of a technical recession, as defined by the Sahm Rule. This rule identifies a recession when the three-month average unemployment rate rises by at least half a percentage point from its lowest point in the past year.
Friday’s figures met this threshold, signaling an abrupt economic downshift. Consequently, investors sought safer assets, leading to declines in major stock indices: the S&P 500 dropped 2%, the Nasdaq 2.5%, and the Dow 1.5%. This trend continued into Monday with further sell-offs overseas.
The crypto market’s rapid decline raises questions about its role as either a speculative asset or a hedge against inflation and recession. Despite hopes that crypto could act as a risk hedge, the recent crash suggests it remains a speculative investment.
Since the downturn, the crypto market has seen its largest three-day sell-off in nearly a year, losing over $500 billion in market value. According to CoinGlass data, this bloodbath wiped out more than $1 billion in leveraged positions within the last 24 hours, including $365 million in Bitcoin and $348 million in Ether.
Khushboo Khullar of Lightning Ventures, speaking to Bloomberg, argued that the crypto sell-off is part of a broader liquidity panic as traders rush to cover margin calls. Khullar views this as a temporary sell-off, presenting a potential buying opportunity.
Josh Gilbert, an eToro market analyst, supports Khullar’s perspective, suggesting that the expected Federal Reserve rate cuts could benefit crypto assets. “Crypto assets have sold off, but many investors will see an opportunity. We see Federal Reserve rate cuts, which are now likely to come sharper than expected, as hugely positive for crypto assets,” Gilbert told Coindesk.
Despite the recent volatility, crypto continues to make strides toward mainstream acceptance. Notably, Morgan Stanley will allow its advisors to offer Bitcoin ETFs starting Wednesday. This follows more than half a year after the introduction of the first Bitcoin ETF. The investment bank will enable over 15,000 of its financial advisors to sell BlackRock’s IBIT and Fidelity’s FBTC. This move is seen as a significant step toward the “mainstreamization” of crypto, given the lengthy regulatory and company processes in major investment banks.
The recent crypto market downturn highlights its volatility and the broader economic concerns affecting all risk assets. While some analysts see the current situation as a temporary sell-off and a buying opportunity, others caution against the speculative nature of crypto. As the market evolves, its role as a mainstream alternative asset continues to grow, marked by increasing institutional acceptance and new investment opportunities.
