3 Historically Unstoppable Dow Stocks That Have Billionaire Money Managers Headed for the Exit

For more than 128 years, the iconic Dow Jones Industrial Average (DJINDICES: ^DJI) has served as one of Wall Street's top "health" barometers. Over this span, we've watched the Dow evolve from an index dominated by industrial stocks to one that currently features 30 diverse multinational businesses.

Although the Dow Jones is packed with mature businesses that have historically proven to be unstoppable, not everyone on Wall Street believes the Dow's 30 components are necessarily headed higher.

Image source: Getty Images.

A little over a week ago, institutional investors were required to file Form 13F with the Securities and Exchange Commission. A 13F offers investors an under-the-hood look at what Wall Street's top asset managers bought and sold in the latest quarter. Despite the Dow being in rally mode and reaching new all-time highs, 13Fs show that select billionaire money managers couldn't sell shares of three Dow components fast enough in the June-ended quarter.

Visa

The first magnificent Dow stock that billionaires surprisingly sold during the second quarter is the leading payment processor Visa (NYSE: V) . The five prominent billionaire sellers were (total shares sold in parenthesis):

• Ole Andreas Halvorsen of Viking Global Investors (6,327,962 shares)
• Ray Dalio of Bridgewater Associates (143,859 shares)
• Terry Smith of Fundsmith (138,076 shares)
• Ken Griffin of Citadel Advisors (114,137 shares)
• Cliff Asness of AQR Capital Management (30,740 shares)

Although profit-taking may explain some of this selling activity, the more likely answer as to why these five billionaires sent shares of Visa to the chopping block is the potential for a U.S. recession. No matter how much we dislike recessions, they're a normal and an evitable aspect of the economic cycle.

Select metrics, such as the first meaningful decline in U.S. M2 money supply since the Great Depression , as well as the longest yield-curve inversion in history, strongly suggest that the U.S. economy will weaken in the months or quarters to come. Since financial stocks like Visa are cyclical, a recession would be expected to weigh on its operating results.

However, economic cycles aren't linear , which works in Visa's favor. While most recessions are resolved in less than a year, the bulk of economic expansions endure for multiple years. When examined with a wide lens, Visa is perfectly positioned to benefit from the long-term growth in consumer and enterprise spending.

There's also plenty of opportunity for Visa to organically and acquisitively push into chronically underbanked emerging markets. Persistent double-digit cross-border volume growth speaks to this multidecade growth opportunity.

In other words, I expect these five billionaire investors will, in hindsight, regret their decisions to sell shares of Visa.

Image source: Coca-Cola.

Coca-Cola

A second unstoppable Dow component that had billionaire money managers running for the exit in the June-ended quarter is beverage goliath Coca-Cola (NYSE: KO) . A total of seven prominent billionaires dumped shares, including (total shares sold in parenthesis):

• Steven Cohen of Point72 Asset Management (3,320,579 shares)
• John Overdeck and David Siegel of Two Sigma Investments (1,328,418 shares)
• Ray Dalio of Bridgewater Associates (1,141,812 shares)
• Jeff Yass of Susquehanna International (560,802 shares)
• Cliff Asness of AQR Capital Management (484,668 shares)
• Ken Fisher of Fisher Asset Management (60,987 shares)

Aside from profit-taking, the expectation that the Federal Reserve will cut interest rates in September might be the catalyst that encouraged these seven billionaires to show shares of Coca-Cola to the door. As interest rates decline, growth stocks will, once again, be able to borrow at more attractive lending rates. This may encourage investors to move away from perceived-to-be "safe" investments like Coca-Cola in favor of higher-growth companies.

I expect billionaires to eventually regret their decisions to sell shares of Coke .

There simply isn't a consumer staples stock with better branding. Coke's products have been the most-chosen from retail shelves for 12 consecutive years , based on Kantar's annual "Brand Footprint" study. Being able to lean on more than a century of its storied history helps it connect with mature consumers. Meanwhile, relying on digital media channels and artificial intelligence (AI) has helped Coca-Cola tailor its message to a new generation of younger customers.

You'd also struggle to find a consumer staples stock with better geographic reach. With the exception of Russia (due to its invasion of Ukraine), North Korea, and Cuba, you'll find Coca-Cola operating in every other country. This is a recipe for steady operating cash flow from developed countries and needle-moving organic growth in emerging markets.

Salesforce

The third unstoppable Dow Jones Industrial Average stock that 13Fs show billionaires couldn't stop selling during the second quarter is cloud-based customer relationship management (CRM) software provider Salesforce (NYSE: CRM) . The four notable billionaire sellers were (total shares sold in parenthesis):

• Philippe Laffont of Coatue Management (2,792,964 shares)
• Stephen Mandel of Lone Pine Capital (2,400,267 shares)
• Israel Englander of Millennium Management (1,768,080 shares)
• Ken Griffin of Citadel Advisors (412,722 shares)

Whereas the selling activity witnessed in Visa and Coca-Cola was a bit of a head-scratcher, things are a bit clearer with Salesforce.

In late May, the company reduced its full-year operating margin guidance by 50 basis points to 19.9% and lowered its subscription and support revenue-growth guidance for the year. Considering that Salesforce has a history of crushing Wall Street's sales expectations, this report was a genuine surprise -- and not in a good way.

The silver lining for Salesforce is that it's the undisputed leader in cloud-based CRM software , and that's not going to change anytime soon. Based on IDC's 2024 "Worldwide Semiannual Software Tracker" report, Salesforce accounted for 21.7% of global CRM share. CRM software is a sustained double-digit growth opportunity that can help an assortment of consumer-facing industries boost their sales.

Something else Salesforce has done particularly well throughout its history is grow inorganically . CEO Marc Benioff has overseen a number of earnings-accretive acquisitions, including MuleSoft, Tableau Software, and Slack Technologies. These deals are broadening his company's sales channels, as well as providing a jumping-off point to increasing cross-selling opportunities as the company's ecosystem grows.

While maintaining a 20% sales-growth rate might prove difficult, Salesforce has demonstrated that it's worthy of a valuation premium, given its moat in cloud-based CRM.

Sean Williams has positions in Visa. The Motley Fool has positions in and recommends Salesforce and Visa. The Motley Fool has a disclosure policy .