Billionaires Are Buying Retail Stocks, Shrugging Off Recession Fears

Investors closely track investments made by billionaires worldwide, especially in a volatile market backdrop. While U.S. equities overwhelmingly rallied in August, key benchmark indexes traded lower during the first week of September as the markets waited for the release of key employment data. Market volatility has risen dramatically over the past week, as evident from the CBOE Volatility Index's 31% gains over the past five days. 

However, billionaires are shrugging off looming recession fears that have grappled the broader market, reflecting their faith in the U.S. economy. Some of the world's wealthiest and most influential financiers are doubling down on retail stocks. These moves suggest deep confidence in the resilience of consumer-facing businesses.

Don't Miss Out:

• Get ‘em while you can — investing in this asset class may be reaching a high-water mark but you can still make returns right now.
• Looking to trade options, stocks, ETFs, and more? Get started with the trading platform that is a one-stop shop.

Retail Stocks: A Comeback Story 

The retail sector has been at the center of economic debate recently. Rising inflation, supply chain disruptions, and geopolitical tensions have all contributed to a murky outlook for consumer markets. 

Nonetheless, consumers are spending money despite the delayed rate cuts, as advanced retail sales rose by 1% month-over-month in July, beating the 0.2% consensus estimate. 

"Once again, this was further evidence that the U.S. consumer still can surprise to the upside," Richard de Chazal, macro analyst at William Blair, said. "This was another solid report, and inconsistent with a consumer who is on the brink of collapse."

Furthermore, the U.S. GDP rose by an estimated 3% in the second quarter of 2024, according to data published by the Bureau of Economic Analysis. 

This, coupled with noteworthy investments from Wall Street's biggest names, could signal a bull market for retail stocks. Their investments often serve as a strong endorsement of their ability to grow and prosper in a fluctuating economy. 

Bill Ackman's Bet on Nike

With a net worth of over $9 billion, Bill Ackman is a controversial yet highly respected hedge fund manager known for his bold and contrarian investment bets. He often leverages his social media presence to generate enthusiasm regarding his latest investments and strategic bets. 

Ackman spent the last few months trying to launch a new closed-end fund, Pershing Square USA, which could double his total assets under management. However, his fund’s initial public offering was scrapped on July 31 as he couldn't garner the desired funding. 

Nonetheless, Ackman's latest investment in Nike, Inc. NKE has stirred investors, as the stock made a stellar comeback after recording its worst-ever performance in June. As of the end of the second quarter of 2024, Ackman's Pershing Square Capital Management holds over three million shares of NKE. 

Nike's slowing sales have been a cause for concern for investors. The company expected its earnings to decline by at least 10% in the fiscal first quarter of 2025 (ended August) due to sluggish demand from China. Consequently, NKE stock declined by 21% intraday following its earnings release. 

Ackman's endorsement has rejuvenated optimism about Nike stock, as NKE shares have increased by over 9% over the past month. 

Read More:

• Private credit outperformed both high-yield bonds and equities in the last 3 market downturns (2008, COVID and 2022). Should you be adding private credit to your portfolio?
• Allocating just 5% of your portfolio to this asset class could bring you big returns. Should you be invested in fine art?

Warren Buffett's Strategic Move With Ulta Beauty Investment 

Stock market guru Warren Buffett's investment portfolio was scrutinized after the world's sixth-richest man reduced his stake in tech behemoth Apple Inc. AAPL last quarter. Buffett also held $277 billion in cash as of the end of the second quarter, a move that drew significant attention from Wall Street, with Elon Musk labeling it "wild."

Buffett also invested a significant portion of his portfolio in Ulta Beauty Inc. ULTA, with his total investment valued at approximately $266 million as of June 30. 

However, the company's financials took a hit in the last quarter, as its revenues and earnings were lower than the consensus estimates for the quarter ended August 3. But Ulta Beauty's CEO Dave Kimbell chalked this up to an "unanticipated operational disruption," claiming they had "actions underway to address the trends."

Nonetheless, Ulta Beauty has been taking active steps to accelerate sales, primarily through endorsements with high-profile celebrities and upscaling its loyalty program and promotional levers. The Oracle of Omaha has invested in ULTA stock, which has risen by over 10% over the past month. 

A 9% Return In Just 3 Months

EquityMultiple's ‘Alpine Note — Basecamp Series' is turning heads and opening wallets. This short-term note investment offers investors a 9% rate of return (APY) with just a 3 month term and $5K minimum. The Basecamp rate is at a significant spread to t-bills. This healthy rate of return won't last long. With the Fed poised to cut interest rates in the near future, now could be the time to lock in a favorable rate of return with a flexible, relatively liquid investment option. 

What's more, Alpine Note — Basecamp can be rolled into another Alpine Note for compounding returns, or into another of EquityMultiple's rigorously vetted real estate investments, which also carry a minimum investment of just $5K. Basecamp is exclusively open to new investors on the EquityMultiple platform.

Looking for fractional real estate investment opportunities? The Benzinga Real Estate Screener features the latest offerings.