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4 Ways You Can Ride The Coattails Of Billionaire Investors

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4 Ways You Can Ride The Coattails Of Billionaire Investors

Coattail investing is a simple strategy in which an investor constructs a portfolio in a way that mimics the portfolio of a hedge fund titan or Wall Street billionaire.

After all, if an investment is good enough for, say, Warren Buffett, then it is most likely good enough for the average investor.

Related Link: How To Use Coattail Investing

The process of coattail investing is complex because hedge funds are not required to disclose new purchases or selling activity to the public right away. While they are required to do so in a timely manner through a 13F regulatory filing document, the time difference between the two events could be large enough that investors will have "missed the boat."

There are, however, several billionaire investors whose business is actually a publicly traded company. Perhaps the most iconic one being Buffett's Berkshire Hathaway Inc. (NYSE: BRK-A) (NYSE: BRK-B), which offer investors to buy a small piece of Buffett's own holding company.

In other words, by buying the stock, an investor is a part owner (albeit very small) in Buffett's holding company.

Warren Buffett

Berkshire Hathaway's class A stock may be out of reach for most investors since it is trading at $221,750.00 as of August 15. In fact, Buffett acknowledged that the class A shares will never split, so it is intended for like-minded investors who are investing for the long term. Class B shares were created to give smaller investors the chance to directly invest in Berkshire, but comes with reduced voting rights.

The class B stock has gained 11.88 percent since the start of 2016, but is higher by just 3.61 percent over the past year. The stock is outperforming the S&P 500 index on a year-to-date basis as the index is higher by nearly 7 percent, but over the past year the index is higher by more than 4 percent.

Carl Icahn

Carl Icahn, the famed billionaire activist investor who earned the reputation as being a corporate raider in the 1980s, is either loved or hated among the investment community.

Those who love Icahn and think his tough approach toward corporate governance will achieve a superior return can buy stock in his holding company, Icahn Enterprises LP (NASDAQ: IEP).

However, the holding company's performance has been poor as of late, down nearly 7 percent since the start of 2016 and down 22 percent over the past year.

Related Link: The Grass Is Always Greener: Why Companies Switch From Private To Public And Vice Versa

Janus Capital Group

Janus Capital Group Inc (NYSE: JNS) is an investment firm with assets under management of nearly $200 billion. The firm is also home to Bill Gross, the famed bond investor joined the firm in 2014 after abruptly leaving Pimco — the firm he co-founded.

The company's stock is higher by more than 4 percent since the start of the year but lower than 7 percent over the past year.

iBillionaire Index

Finally, the Direxion iBillionaire Index ETF (Direxion Shares Exchange Traded Fund Trust (NYSE: IBLN)) doesn't provide investors with exposure to a single firm, as its performance is correlated to the iBillionaire index.

The iBillionaire index is "comprised of up to the 30 large-cap U.S. equities in which a select pool of investment billionaires has allocated the most assets, according to Form 13F filings."

In addition, "Billionaires are selected from a group of U.S. investment billionaires based on net worth, source of wealth, and portfolio size."

The exchange-traded fund has gained nearly 6.50 percent since the start of 2016, but just 0.29 percent over the past year.

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