What Did the Smart Money Buy in 2010?
Whatever the stock market environment is, you’ll always hear people talking about what the “smart money” is buying. They, of course, mean what the smart investors are buying. After all, if you can get into the same picks as Wall Street icons Warren Buffett and Carl Icahn, you have a better chance of cashing in. Right?
That’s not always true. A look back at some of the publicly traded stocks linked to the biggest investors and entrepreneurs on Wall Street in 2010 shows a number of miscues. While these stocks — including Buffett’s Berkshire Hathaway (NYSE: BRK.B) and Icahn’s Icahn Enterprises (NYSE: IEP) — aren’t perfect benchmarks of one icon’s investing success or failure, they give an indication as to whether it was a good year or a bad year.
Without further ado, here’s how seven of Wall Street’s biggest names fared in the past year.
Jeff Reeves is editor of InvestorPlace.com. Follow him on Twitter at http://twitter.com/JeffReevesIP.
Buffett Beats the Street 3x Over
Folksy investing icon Warren Buffett had another great year, at least by the measure of his renowned Berkshire Hathaway (NYSE: BRK.B) stock.
The Omaha holding company has racked up 20% returns year-to-date — well over three times the S&P 500 index’s gains in 2010. It’s no surprise the value investor did well this year, since many good companies were depressed to bargain valuations after the volatility of 2009.
And if you’re wondering what value plays Buffett has in his sights for 2011, a look at the latest changes in Berkshire holdings shows a concentration on financials and bank stocks.
Carlos Slim Sees Fat Profits
Mexican business tycoon Carlos Slim pushed out Bill Gates as the world’s richest person in 2010 according to Forbes, and it’s no surprise why. As the CEO of Latin American telecom giants Telmex (NYSE: TMX) and America Movil (NYSE: AMX), he has shared in the success of emerging markets big time.
While Telmex has seen some earnings trouble recently and is lagging with a 8% loss year-to-date, America Movil has soared 20% so far in 2010. That’s over three times the broader stock market. What’s more, Carlos Slim’s global conglomerate Grupo Carso (PINK: GPOVY) has exploded late in the year — racking up 70% returns in 2010 and over 55% returns since Aug. 1 alone!
Jobs Rides Apple and Disney to Big Gains
Apple’s rock star CEO Steve Jobs is best known for his magic product launches and habit of micromanaging product development. But he is also a Wall Street heavyweight.
As of the end of 2009, Jobs owned nearly 5.5 million shares of Apple (NASDAQ: AAPL), as well as a 7% stake in Disney (NYSE: DIS) — about 138 million shares, which he received in exchange for Disney’s acquisition of Pixar in 2006. Both stocks have paid off. Disney gained 15% in 2010, more than double the S&P’s performance. Apple lapped the market seven times over due to another successful iPhone launch and the breakout success of the iPad tablet computer.
Icahn Enterprises Suffers in 2010
Carl Icahn has been making some headlines in 2010, most recently with his moves to buy Lions Gate Entertainment (NYSE: LGF) and to unload his stake in Yahoo! (NASDAQ: YHOO).
Yet judging by the performance of publicly traded Icahn Enterprises (NYSE: IEP), Carl’s moves have been largely unwise in 2010 — the holding company is off about 12% on the year compared with 6% returns for the S&P 500 so far in 2010. IPE is also off about 75% from its early 2008 peak.
Cramer Makes Mad Money – But Is It Fading?
CNBC analyst Jim Cramer has had an interesting year, perhaps most notably via his meek March appearance on The Daily Show with Jon Stewart. But Cramer isn’t just a talking head — he’s also the brains behind TheStreet.com (NYSE: TSCM), an online investing site which Cramer founded and currently chairs.
Cramer currently is the largest shareholder in TheStreet.com, with 1.8 million shares for a roughly 6% ownership stake as of September. So how has TheStreet performed?
Well, it’s technically up 12% year-to-date in 2010 and has doubled the major indexes’ returns. However, shares are off significantly from an April peak that came to a crashing halt when TSCM stock lost 25% in 25 days, and have been sluggish in the last few months despite the big gains for the S&P and Dow since Sept. 1.
Microsoft Loss Won’t Break Gates’ Bank
Though his brainchild Microsoft (NYSE: MSFT) is now run by Steve Ballmer, billionaire Bill Gates still has a lot riding on the company. Gates remains the largest individual shareholder with more than 8% of the common stock. That means 2010 took a big chunk out of the tech icon’s pocketbook, with Microsoft sliding more than 15% on the year. The company did boost its dividend to a yield of about 2.5%, but that still doesn’t make up for the loss.
In case you’re worried about Mr. Gates’ finances, don’t be. Though Gates was bumped him from ranking as the “world’s richest person” by Carlos Slim, being the second-wealthiest fellow on the planet isn’t all that bad either. With $53 billion in net worth, Gates is not headed for the poorhouse.
Oracle Pays Off for Ellison
Larry Ellison, cofounder and chief executive officer of Oracle (NASDAQ: ORCL), is another Silicon Valley icon who has become a Wall Street fixture. As of Nov. 15, he owned a whopping 1.1 billion shares of Oracle — yes, that’s billion with a B — for roughly 20% of the company.
That cache of stock appreciated nicely in 2010, rising 15% while the broader stock market added only half as much. Part of the reason for the bounce is likely a broader tech recovery, but the acquisition of Java software giant Sun Microsystems early in the year has probably also put some spring in Oracle’s step. And, of course, cash in Ellison’s bank account.
