It’s good to be a Walton from Arkansas. Wal-Mart Stores shares may be down about 10% in the past year, but they are still the biggest source of stock market wealth on this year’s Forbes list of the world’s richest people, accounting for almost $96 billion of wealth among eight people–five of them relatives of founder Sam Walton Sam Walton . They’re happy holding the stock, but should you consider buying it for your portfolio?
Nine newsletters tracked by Hulbert Interactive have it in their portfolios, including market-beaters like The Lou Dobbs Money Letter, The Buyback Letter and Dow Theory Forecasts. Richard Moroney, editor of Dow Theory Forecasts, says Wal-Mart is a long-term buy, and it’s encouraged by the company’s 15% quarterly dividend hike to $0.15 per share. Wal-Mart now yields 1.2% and trades for 19 times expected earnings this year of $2.73 per share.
After Wal-Mart, the next single biggest concentrated stock holding among the world’s richest people is the $49.3 billion of Berkshire Hathaway held by Warren Buffett, Charlie Munger, and four other Berkshire billionaires. A full dozen letters tracked by Hulbert recommend the “Baby Berkshires,” Berkshire’s B-class shares. “This is as close to a buy-it-and-forget-it as you get in the stock market,” says Jack Adamo, editor of Jack Adamo’s Insiders PLUS. “Not only are you buying a fantastic portfolio of assets, but you’re also buying the services of the world’s best money manager. Buffett has shown discipline for decades, buying when it’s right and holding back when it’s not.”
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The world’s richest man, Bill Gates, along with his Harvard pal, Steven Ballmer, and high school buddy, Paul Allen, who helped him launch the world’s biggest software company, hold $44.5 billion worth of Microsoftstock. The gang from Redmond, Wash., has done exceptionally well since Microsoft went public 19 years ago and closed its first day of trading on March 13, 1986, at a split-adjusted $0.09 per share. That’s a gain of 27,889%.
But Microsoft has been basically flat for the past five years, after coming off of its March 2000 high of $49.45. In the nearer term, Microsoft is down about 15% since paying a special $3 dividend last fall. Seven newsletters currently recommend buying Microsoft, although not with gusto. Moroney from Dow Theory Forecasts recently took Microsoft out of his top 20 “focus list” stocks. He’s encouraged by the company’s robust cash flow, dominant market leadership position and broad product line-up. He’s turned off, like many investors, by the company’s antitrust issues, which continue to bedevil it, especially in Europe. Moroney still advises buying Microsoft for the long-term.
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The year’s best performer among top stocks held by billionaires is recommended by none of the investment newsletters. Shares of Mittal Steelare up 335% in the past year, valuing the 88% stake in the company owned by Lakshmi Mittal at $24 billion. The Netherlands-based steel giant grew earnings by 35% last year, but still trades for less than 5.5 times year-ahead earnings.
Last August’s initial public offering of Google made billionaires of founders Sergey Brin and Larry Page, who at 31 and 32 years of age, respectively, are the second and third youngest billionaires on the Forbes list. Despite more than doubling since coming out of the gate on Aug. 19, only one adviser is recommending shares of Google. Curtis Hesler of Professional Timing Servicesays Google is a trading stock in his portfolio, which consists mostly of energy stocks, metals and other hard asset plays. Hesler gets his buy-and-sell signals from a model, which currently tells him to sell if the price breaks below $176.