When looking for stocks to buy, it can pay to look at the trades professional investment managers are making. Pro money managers tend to have far more resources than the average investor and their trades can provide valuable investment ideas.
Here, I’m going to highlight some recent trades from three well-known UK money managers. Are these stocks worth buying today?
Buying the dip
Let’s start with a purchase from star fund manager Nick Train, who runs the Lindsell Train UK Equity fund. He has been snapping up Diageo (LSE: DGE) shares recently. They’ve had a pullback and the investment manager has been buying the dip.
Train believes Diageo can offer inflation protection (thanks to its strong brands) as well as long-term growth. And he likes the fact that the company is buying back its own shares. He believes this will increase the possible share price upside when the shares come back into favour (this may not happen overnight).
Diageo is an ideal investment to hold in current economic conditions because it offers a rare and valuable combination of inflation protection and secular growth.
Nick Train
I like this trade from Train. If I didn’t already have a large position in Diageo, I’d be buying more shares in the alcoholic beverages company.
Having a nibble
Next up is a purchase from Terry Smith, who runs the popular Fundsmith Equity fund.
US regulatory filings show that in the final quarter of 2022, Fundsmith was buying Apple (NASDAQ: AAPL) shares. According to Fundsmith’s 13F filing, the investment manager snapped up 12,749 shares in Q4.
Smith first bought Apple shares in the third quarter of 2022. And it seems he’s keen to buy more. However, his recent purchases have been quite small. Those 12,749 Apple shares probably cost Smith less than $2m (Fundsmith manages around £23bn of investors’ money). This suggests he’s waiting for a better opportunity to boost his stake significantly.
I think this is a smart approach from Smith. I’d be prepared to have a nibble at Apple shares today. But I’d wait for some market volatility before really loading up on the stock as the current valuation is a little on the high side.
Aggressive buying
Finally, I have a notable trade from Scottish fund manager Baillie Gifford, which runs a number of popular funds and trusts including the Scottish Mortgage Investment Trust.
13F filings shows that in the final quarter of 2022, the investment management company significantly upped its stake in US-listed renewable energy company SolarEdge Technologies. Over the quarter, it snapped up 36,411 shares (around $11m worth). This increased the size of the firm’s holding by a whopping 2,636%.
Now this trade is very interesting, in my view. SolarEdge Technologies – which specialises in solar energy solutions – is generating strong revenue growth at the moment (+61% revenue growth last quarter) and it’s already profitable. So it could be a great play on the clean energy theme.
It’s a higher risk stock as its valuation is quite high. All things considered, however, I think it’s worth a closer look right now.
