Editor’s Note: Related ticker: Apple Inc. (NASDAQ:AAPL)
We maintain a database of quarterly 13F filings from hedge funds and other notable investors such as billionaire George Soros. This information can be used to develop investing strategies (we have found that the most popular small cap stocks among hedge funds generate an average excess return of 18 percentage points per year, and we think that other techniques are possible as well) as well as to track individual managers’ interest in individual stocks over time. This allows us to see, for example, which stocks Soros is a long-term owner of. Here are the five largest positions from Soros’s 13F for the beginning of 2013 which he had had at least $40 million invested in at the end of 2010 (or see the full list of his stock picks):
The most recent filing shows Soros with 8.1 million shares of Citigroup Inc (NYSE:C). Citigroup Inc (NYSE:C) is currently trading at a discount to the book value of its equity, with a P/B ratio of 0.8, even after a 60% increase in price in the last year. It’s arguably a candidate for value status in earnings terms as well, with consensus forecasts for 2014 implying a forward earnings multiple of 9. We’d be interested in comparing it to other large banks. Billionaire David Tepper’s Appaloosa Management reported a position of 9.2 million shares in its own 13F (check out Tepper’s stock picks).
Soros kept his holdings of Google Inc (NASDAQ:GOOG) about constant between October and December 2012 at about 190,000 shares. In the first quarter of 2013, Google Inc (NASDAQ:GOOG) experienced a 31% increase in revenue versus a year earlier, with earnings rising by 16%; the search business continues to grow, and Google Inc (NASDAQ:GOOG) continues to capitalize on its integration of Motorola Mobility Holdings. Analyst expectations place the current stock at 16 times 2014 earnings. Lone Pine Capital, managed by billionaire Stephen Mandel, increased its stake by 45% during Q4 (research more stocks Mandel was buying).
Delta Air Lines, Inc. (NYSE:DAL), of all things, has been another of Soros’s long term picks. The airline declined in price during 2011, but is currently up 48% from the end of 2010 as investors look towards industry consolidation pushing up prices. At its current earnings run rate Delta Air Lines, Inc. (NYSE:DAL) isn’t that great a value, but if we look at consensus forecasts for the forward year it certainly looks cheap. As a result we think that investors should consider it despite the challenges in airlines. Ken Heebner’s Capital Growth Management initiated a position of over 11 million shares in Delta Air Lines, Inc. (NYSE:DAL) (see more stocks Heebner likes).
According to the 13F, Soros increased the size of his position in JPMorgan Chase & Co. (NYSE:JPM) to a total of 2.6 million shares. JPMorgan Chase & Co. (NYSE:JPM) looks interesting as a value stock: the market price is right about at book value, and the trailing and forward P/Es are 9 and 8 respectively. Revenue was only up slightly in its most recent quarter compared to the previous year, but the stock is cheap enough that the company doesn’t need to improve its numbers much. Fisher Asset Management was another major shareholder of JPMorgan Chase & Co. (NYSE:JPM); that fund is managed by billionaire Ken Fisher (find Fisher’s favorite stocks).
Soros disclosed ownership of about 180,000 shares of Apple Inc. (NASDAQ:AAPL) as of the end of 2012. Apple Inc. (NASDAQ:AAPL) had lost its place as the most popular stock among hedge funds to American International Group Inc (NYSE:AIG) during the fourth quarter of the year (see more of hedge funds’ favorite stocks). We’d note that American International Group Inc (NYSE:AIG) is one of Soros’s largest positions, though he has bought these shares since the beginning of 2011. Apple Inc. (NASDAQ:AAPL) trades at 11 times its trailing earnings- even with a large share of its market cap being cash- as the market is expecting its margins to continue to fall; net income fell 18% last quarter from a year ago despite a rise in revenue.
Disclosure: I own no shares of any stocks mentioned in this article.