3 Stocks Billionaires Are Buying

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Warren Buffett, George Soros, and Carl Icahn are among the most successful investors of all time, so following in their footsteps could prove profit-friendly. Fortunately, these gurus file 13F reports with the Securities and Exchange Commission every quarter that show exactly what they've been stashing away in their portfolios. Since 13F reports can be a treasure trove of new investment ideas, let's take a closer look at their most recent disclosures and see what these billionaire money managers have been buying lately.

Warren Buffett snaps up airlines

Someone over at Berkshire Hathaway's Omaha headquarters made an industrywide bet on airlines last quarter, and while the buy may not have been made by Warren Buffett himself, it's still striking news given that Buffett has in the past panned the industry as a terrible investment.

Last quarter, the 21.8-million-share purchase of American Airlines (NASDAQ: AAL)  was Berkshire's biggest new buy. That stake is worth more than $1 billion today, and while that's a small slice of Berkshire's $130 billion portfolio, it still suggests Berkshire's money managers are confident that airlines are finally on solid financial footing.

In the past, price wars and cyclical spikes in jet fuel prices have caused air carriers to struggle. However, the industry has done a far better job at holding the line on prices and managing jet fuel costs lately. Airlines, including American Airlines, have rightsized their flight schedules so that their planes are fuller, and they've embraced fuel-saving measures, such as baggage fees. They've invested in next-generation planes that are lighter and more fuel-efficient, too. As a result, American Airlines (and its peers) are much more profitable than they were a decade ago.

Berkshire's managers appear to believe that this profit-first mentality will continue to pay off, especially if jet fuel prices remain in check. Jet fuel accounts for over 20% of an airline's operating costs, and lower jet fuel prices this year are providing a $21 billion tailwind for the industry globally, according to the International Air Transport Association.
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