No one gets it right all the time, and that includes the world's greatest investors.
To continually calibrate price and time without fail is impossible. Every investor has been annoyed at seeing the share price drift lower after a purchase.
Markets are unpredictable over the short term, but if the analysis is correct, the stars will eventually align: share price will rise and wealth will be realized. You don't become a billionaire if the stars fail to align much more often than not.
I occasionally parse the financial press to see what stocks billionaires are buying. That said, I never blindly dive into a stock because someone – no matter how wealthy – has bought it. But worthy investment ideas are occasionally generated. If I can exploit that idea at a better price than the billionaire, all the better.
I've found a couple quality investment ideas that deliver periodic payments and are owned by two of the world's greatest investors. Better yet, you can get in on their income ideas at a discount to their latest purchase price.
If you can buy a stock cheaper than Warren Buffett, you should at least look at that stock. Buffett’s Berkshire Hathaway (NYSE: BRK.a) has bought over 68 million shares of International Business Machines (NYSE: IBM). And that translates to roughly 6% of the company's shares.
Buffett's been accumulating IBM shares over the past couple years. His most recent purchase occurred during the fourth quarter of 2012, where he added to his holdings at an average price of $195. Today, IBM trades around $181 a share, a 7% discount to Buffett's purchase price.
You might think of IBM as your grandfather's tech stock, but it keeps moving forward. The company is a leader in IT infrastructure, the stuff that keeps data flowing within a company. It's also making inroads in the sexier fields of mobile communications and cloud computing.
IBM isn't a high-yield stock, yielding just over 2%. But come hell or high water, that dividend keeps moving forward.
Similarly, another billionaire investor has also been on a recent buying spree. George Soros doesn't dominate headlines like Warren Buffett, but his record is similarly impressive. His $20-billion fortune puts him at No. 30 on the Forbes 400 list.
Soros has taken a shine to retailing. He recently accumulated large positions in J.C. Penney (NYSE: JCP) and Macy's (NYSE: M). I prefer the latter to the former: J.C. Penney is a non-dividend-paying basket case; Macy's is a solid dividend grower.
Macy's is also an old upscale brand with its own name and with Bloomingdale’s. This isn't to say it's stodgy. It's not above pursuing relationships with hip retailers like Finish Line (NASDAQ: FINL) to develop the popular store-within-a-store-concept that draws customers these days.
Like IBM, Macy's keeps moving forward. Over the past 10 years, revenue has nearly doubled to $27.8 billion from $15.6 billion. As for the dividend, it keeps moving forward as well. Over the past 10 years, the dividend has grown at a 16% average annual rate. The latest increase, which occurred in June was even more impressive at 25%.
George Soros paid an average $46.44 a share for his Macy's position in the second quarter of 2013. Today, you can buy the same stock at roughly a 10% discount.
Of course, no investment is guaranteed. But when legendary investor pours into an investment that adheres to my income-oriented philosophy toward, I take notice. And I sometimes even act.