As investors brace for the possibility of an economic downturn, billionaire investor Paul Singer’s investment strategies offer valuable insights into wealth management. In this article, we’ll take a closer look at Singer’s investment philosophy and the two stocks he remains heavily invested in, despite his prediction of an impending recession.
Singer’s Investment Philosophy:
Singer, the founder of hedge fund Elliott Management, is known for his value investing approach. He focuses on investing in undervalued companies and then working to unlock their full potential. Singer also places a strong emphasis on risk management and preserving capital, which has helped him navigate volatile market conditions in the past.
Investing in Uncertain Times:
Billionaire hedge manager Paul Singer is warning of a high-risk environment where central banks are likely to make the wrong decision, which could lead to a recession. However, Singer’s activist investor firm, Elliott Investment Management, has been investing heavily in two stocks that have shown they can keep posting gains. Marathon Petroleum and Pinterest have both shown strong 12-month gains, and Singer has bought in for over half a billion dollars in each.
Marathon Petroleum Corp. (MPC):
Marathon Petroleum (MPC:NYE) is one of the oil industry’s major names and is North America’s largest petroleum refining company, boasting a market cap of $57 billion and more than $177 billion in annual operating revenues.
The company was able to outperform the equity markets by a wide margin, with its stock up 60% in the last 12 months compared to the S&P 500’s near-7% drop. The refining operations of the company back up this performance. From its headquarters in Findlay, Ohio, Marathon oversees a continent-spanning refining network of 13 active refineries that can process 2.9 million barrels of oil per day.
Marathon saw some solid gains in its last reported financial quarter, 4Q22. The company’s top line of $40.1 billion beat forecasts by over $4.6 billion and gained more than 12% year-over-year. Marathon’s EPS, reported at $6.65, was $1.02 higher than expected and more than 5x higher than the year-ago quarter’s figure of $1.30.
According to Stock Target Advisor, Marathon Petroleum has a Strong Buy consensus rating based on 13 recent analyst reviews, including 11 Buys and two Holds. Raymond James analyst Justin Jenkins rates MPC shares a Strong Buy, along with a $165 price target, which implies an upside potential of 24% for the next 12 months.
Pinterest Inc. (PINS):
Pinterest, Inc. (PINS:NYE), the next big holding of Singer, is an image-sharing and social media service. Pinterest shares have been on a tear, with a 98% gain over the past 12 months, easily outperforming the overall markets. The company’s success is attributable to its platform’s growing user base and the ongoing shift toward e-commerce.
In the fourth quarter of 2022, Pinterest reported earnings of 63 cents per share, beating the consensus estimate of 27 cents per share. Revenue for the quarter came in at $1.1 billion, up 46.5% year-over-year. Pinterest’s monthly active users rose 9% year-over-year to 450 million. Pinterest has not yet reached its full potential, as the company’s focus on expanding e-commerce opportunities should help to drive further growth.
Pinterest also has a Strong Buy consensus rating based on 23 recent analyst reviews, including 19 Buys, three Holds, and one Sell. The average price target of $87.58 implies a 15% gain for the next 12 months.
The Benefits of Long-Term Investing
Singer’s long-term investing approach has been a key factor in his success as an investor. He doesn’t try to time the market or make short-term gains, instead focusing on finding undervalued companies with strong growth potential. This approach allows him to take a patient and disciplined approach to investing, which can help investors weather market volatility.
In conclusion, Singer’s investments in Marathon Petroleum and Pinterest may provide a level of security amid an uncertain economic environment.