Do you every wish you could look over the shoulder of legendary investors and see what they are buying during the 2022 market crash? It could give insight into their thoughts about the future. It would be more of a look at their own strategy based on their method and time frame but would be interesting to see. We can do this with their 13f filings which occur every quarter. Dataroma aggregates the information into top buys and sells among other categories. Below is the latest full Quarter 2 results for what the super investors were buying this year as the market was falling.
What stocks are smart money buying?
1. Google
24 Super investors bought Alphabet (GOOGL, GOOG) in the second quarter of 2022. 16 of them bought the class A shares (GOOGL) and 13 of them bought the class C shares (GOOG). Class A has voting rights and class C shares don’t. This was by far the number one choice of the most super investors for recent buying.
Alphabet currently has some of the best financials and strongest balance sheet in the history of financial markets. It’s basically the primary gateway to the world wide web and finding anything you want on the internet. Google in contrast to other companies said it saw an increase in advertising spend in the first half of 2022.
2. Meta
17 Super investors bought Meta (META) as it dropped its first 30% in Q2. Meta (Facebook) has become a value stock with a P/E ratio of only 10.51 currently and is now down 62.31% year to date. Super investors see value in Meta at these prices. Zuckerberg’s pivot of the company into the Metaverse has cost billions and has been unsuccessful so far in customer interest or engagement along with not making any profits.
In addition to the metaverse pivot, Facebook also said their advertising revenue was dropping due to macroeconomic conditions. There is also a concern with how Facebook manages the new regulations against tracking cookies for advertising. Buying Meta here could be a bet on a comeback for Zuckerberg as he rethinks his company’s positioning.
3. Amazon
15 Super investors bought Amazon (AMZN) as its priced dropped in Q2 with its declining sales and revenue that the company said was due to the 2022 macroeconomic environment and consumers having less discretionary income for online purchases. This is what creates opportunities to buy great companies at low prices as Amazon restructures operations after the 2020 to 2021 boom comes to an end with a recession and high inflation. Amazon remains the dominant online retailer and has a huge cloud computing business. Amazon is the search engine for online shoppers.
4. Microsoft
10 Super investors bought Microsoft (MSFT) as it continues to lead in computer operating systems, office software, and now a major player in cloud computing. Microsoft has one of the strongest balance sheets in the corporate world and management continues to grow sales and revenue. One of the strongest companies fundamentally.
5. Disney
10 Super investors bought Disney (DIS) as it fell 31% on Q2. This could be a long term value play as they may not think that the value of the company is properly priced in as it owns many intellectual property brands like Marvel and Disney+ streaming has been a huge success with subscribers.
6. Booking Holdings
8 Super investors bought Booking Holdings (BKNG) as this is a bet on the return of travelling, vacations, and tourism. It’s holdings make it basically a travel ETF. Booking holdings operates in over 225 countries, owns travel booking sites Priceline, Kayak, Booking.com, Agoda, Rentalcars.com, and restaurant booking service OpenTable.[1]
7. PayPal
8 Super investors bought PayPal (PYPL) as it still has 50.32% of the online payment processing market share. The big investors got interested as it dropped about 40% in price during Q2. This is what half of people still use to buy and sell things online, few companies have every had this size of a market share in any business. It remains the primary money of the internet.
8. Netflix
7 Super investors bought Netflix (NFLX) as its screen time remains far higher than any of the new competitors and remains the dominate leader in the streaming services battle for consumer attention. They remain number one in market share and revenue per subscriber. Netflix has recently announced adding a new version of its service that will have ads. Super investors got interested as Netflix fell 53% in price during the 2nd quarter of 2022.
9. US Bancorp
7 Super investors bought US Bancorp (USB) and it is owned by both Warren Buffett and Charlie Munger as they both love the banking industry and this bank specifically.
10. Adobe
7 Super investors bought Adobe (ADBE) after the initial 20% decline from the price peak. Adobe is a powerful modern economy stock as it’s a top software company with ownership of some of the most popular programs in the world like Photoshop as just one example. It’s difficult for businesses to switch from Adobe products giving them great cash flow and a competitive moat versus any competition.[2]
What is the best stock to buy when the market crashes?
The best stock to buy when the market crashes is one that has real intrinsic business value for earnings, assets, and cash flow. During stock market crashes the high price to earnings ratios given to speculative stocks contracts and the price plunges. The best stocks to buy are ones with good valuations based on real business operations and future value. Investors want to see positive earnings and for income investors a dividend can be attractive as the yield on the stock rises as the price drops.
Stock market crashes give long term investors great opportunities to buy high quality stocks at a great price, Bear markets are like strong hurricanes that damage all boats regardless of how strong they are. This is where value investors and buy and hold investors get the best entries for long term investments. We see these types of stocks in the above list, ones with high market share, brand value, and great long term prospects for continued success.
Should I pull my money out of the stock market?
Whether you should pull your money out of the stock market depends on your own strategy and time frame. If you have no trading or investing system then you need to find one through research or professional advice. A buy and hold investor holds for 20-year to 30-year periods or more and doesn’t exit until retirement. A trend follower trades in and out of the stock market based on the entry and exit signals they are being given by the price action. Warren Buffett’s holding period is forever with the stocks he buys unless their fundamentals change. Buffett holds what he has, builds up cash and looks to buy into stock market crashes.
Know your own strategy, risk tolerance, return goals, and time frame to know what to do during each market environment.
This information is for educational and informational purposes only and you should seek the advice of a certified investment advisor for personalized investment advice.