Bargain Stocks Billionaires Are Buying

As an experienced investor, I've learned that following the lead of billionaire investors can be a smart strategy. These seasoned investors have a proven track record of making profitable decisions, and their insights can provide valuable guidance for retail investors. In this article, I'll highlight two bargain stocks that billionaires are buying, based on recent Form 13F filings.

1. Alibaba Group Holding (BABA)

Alibaba, the Chinese e-commerce giant, has caught the attention of several billionaire investors, including David Tepper and Ken Griffin. Tepper's hedge fund, Appaloosa Management, increased its stake in Alibaba by nearly 159% in the first quarter of 2024, while Griffin's hedge fund, Citadel, increased its stake by almost 27% during the same period.

The primary reason these billionaires are buying Alibaba is its undervalued status. The stock trades at a forward earnings multiple of slightly over 9.5, which is dirt cheap for a tech stock. Additionally, Alibaba has a strong track record of revenue growth and a dominant position in the Chinese e-commerce market. In the most recent quarter, the company reported revenue growth of 29% year over year.



However, there are risks associated with investing in Alibaba, such as regulatory risks and geopolitical tensions. To mitigate these risks, billionaire investors maintain diversified portfolios and focus on long-term investment horizons. They also look for undervalued stocks with strong fundamentals, which can provide a margin of safety and potential upside if the company's performance improves.

2. PayPal Holdings (PYPL)

Another bargain stock that billionaires are buying is PayPal, the digital payments company. Paul Tudor Jones, II, and Ken Griffin have both initiated or increased their positions in PayPal during the first quarter of 2024. PayPal stock is down nearly 80% below its high set in mid-2021 and trades at only 15 times forward earnings, much lower than the S&P 500 index's forward earnings multiple of 21.2.

PayPal's undervalued status, combined with its strong fundamentals and growth potential, makes it an attractive investment for billionaire investors. The company has a history of strong revenue growth and a dominant position in the digital payments market. In the most recent quarter, PayPal reported revenue growth of 11% year over year.



However, PayPal faces risks such as market risk, regulatory risk, and competition risk. To mitigate these risks, billionaire investors focus on the company's fundamentals, such as earnings growth, revenue growth, and cash flow generation. They also look for undervalued stocks with strong fundamentals, which can provide a margin of safety and potential upside if the company's performance improves.

In conclusion, following the lead of billionaire investors can be a smart strategy for retail investors. By focusing on undervalued stocks with strong fundamentals, such as Alibaba and PayPal, investors can identify potential bargain opportunities. However, it's essential to consider the risks associated with these stocks and maintain a diversified portfolio to spread risk. By doing so, retail investors can benefit from the insights of billionaire investors and make informed investment decisions.