If you want to put your money where the world's investing "gurus" are, it's time to buy one of my favorite trading ideas...
Every quarter, elite money managers have to file reports (called "13Fs") on which stocks they hold, which ones they've recently purchased, and which ones they've sold. Reading these reports is a way to get millions of dollars' worth of research for free. We'd be fools not to "look over their shoulders" for trading ideas.
This quarter, when I looked over the shoulders of a few legendary investors, I found something familiar: Big Cheap Tech.
If you're a longtime S&A reader, you've seen this term before. It's how we describe a few of the world's best tech companies – like Microsoft Corp.(NASDAQ: MSFT, Stock Forum), Apple Inc. (Nasdaq: AAPL, Stock Forum), Intel Corp. (NASDAQ: INTC, Stock Forum), IBM Corp. (NYSE: IBM, Stock Forum), Cisco Systems Inc. (NASDAQ: CSCO, Stock Forum), and EMC Corp. (NYSE: EMC, Stock Forum).
These companies are all leaders in their fields. Many of them have huge sums of cash on their balance sheets. Many of them pay above-average dividends. Many of them are great values right now...
And many of them hold big money from some of the greatest living investors.
Joel Greenblatt manages over $4 billion at Gotham Capital... And he wrote the excellent The Little Book That Still Beats the Market (a great book for new investors). Greenblatt holds Apple, Microsoft, and Qualcomm in the Gotham portfolio.
Stanley Druckenmiller was featured in The New Market Wizards because of his ability to consistently generate huge returns (over 38% annually) on multibillion-dollar portfolios. Two of Druckenmiller's top holdings for his "family office" are Google and Microsoft.
Other gurus are taking the "shotgun" approach to Big Cheap Tech...
Paul Tudor Jones is a legendary trader who generated 99%-plus returns for five consecutive years. He just opened a new position in PowerShares QQQ Trust Series 1. (NASDAQ: QQQ, Stock Forum).
This exchange-traded fund tracks the Nasdaq 100 – an index made up of the 100 largest nonfinancial companies listed on the Nasdaq exchange. The biggest weightings in this index are Apple, Microsoft, and Google.
You'll also find QQQ and call options (leveraged bullish bets) on QQQ in David Tepper's portfolio. Tepper has averaged 30% annual returns since founding his hedge fund, Appaloosa Management, in 1993... And QQQ is his second-largest position.
While some gurus are just coming around to the appeal of Big Cheap Tech, my DailyWealth Trader subscribers are already in position. We suggested buying QQQ in DailyWealth Trader back in June 2012. The fund is up 43% since then.
But Big Tech is still cheap. Take Apple and Microsoft, for example... These two stocks make up more than 20% of QQQ's holdings. After accounting for their huge cash hoards, Apple trades at 9.3 times forward earnings... and Microsoft trades at 10.5 times forward earnings. Those are dirt-cheap valuations for great companies.
For years now, Stansberry & Associates analysts (including this one) have been showing readers how to make money with Big Cheap Tech. These stocks are still plenty big – they dominate their sectors. They're more popular than they used to be – but they're still a bargain. And the "gurus" are buying.