Billionaire George Soros’s Latest Stock Picks

SOROS FUND MANAGEMENTGeorge Soros is best known for the fortune he made shorting the British pound in 1992, but he currently invests a considerable amount of money in equities and so is required to report many of his long positions in 13F filings. We’ve gone through the 13F for the third quarter of the year and compared Soros’s holdings at the end of September to three months earlier. Read on for our impression of his moves and compare them to what he’s bought and sold before.

AIG. American International Group, Inc. (NYSE:AIG) became Soros’s largest 13F equity holding during the third quarter with a position of over 15 million shares being reported in the filing. A number of value investors have been getting into the insurer over the course of the year, and at a P/B ratio of 0.5 it certainly looks cheap compared to the book value of its equity. We also like its earnings multiples- it trades at 9 times forward earnings estimates- and revenue was up strongly in the third quarter compared to the same period in 2011. Fellow billionaire Dan Loeb had initiated a position during the second quarter of 2012 and we think that it still looks like a good buy for investors.

Selling Walmart. Wal-Mart Stores, Inc. (NYSE:WMT) had been Soros’s top stock last quarter, but between July and September he sold about half of his shares in the discount retailer. Wal-Mart reported only modest growth in its most recent quarter compared to the same period in the previous year, but given its massive size and its limited exposure to broader market conditions (the beta is 0.4) we think that’s a fairly good result. Limited growth also indicates that Wal-Mart isn’t seeing too much competitive pressure from dollar stores. The stock trades at only 14 times trailing earnings and we actually think that it’s one of the better buys in the retail industry. Warren Buffett is a major Wal-Mart shareholder.

Selling Westport. The near-closing of the position in Westport Innovations Inc. (NASDAQ:WPRT) could be name specific or part of a broader move away from auto parts. Westport provides low-emission engines that run on natural gas and other relatively clean fuels, so there’s company specific factors as well as broader industry demand driving the stock. The market cap is currently $1.4 billion even though Westport is expected to be unprofitable both this year and next year. With the business struggling recently, and quit heavy short interest (27% of outstanding shares held short) we think the stock should be avoided.

Megacap dividends. Soros may have sold some shares of Wal-Mart, but it’s still one of his six largest 13F equity positions along with an increased stake in General Electric Company (NYSE:GE) and a large increase in his holdings of Johnson & Johnson (NYSE:JNJ). These latter two stocks pay dividend yields above 3% at current prices, and have market caps of about $200 billion. They also both got mid-single digit growth rates in revenue last quarter versus a year earlier, though higher costs at Johnson & Johnson had driven that company’s net income down somewhat. Their forward earnings multiples are in the 12-13 range, which along with the dividend yield indicates value potential, though in Johnson & Johnson’s case these forward estimates represent expectations of high earnings growth. We’re less sure about that stock, though GE could merit a closer look.

We think that Soros’s moves in AIG and Westport make perfect sense. Selling Wal-Mart is a bit harder to understand as we like the company and think that it offers a good opportunity in retail- many general retail stores trade at considerably higher earnings multiples, and many specialty big-box stores such as Best Buy are proving less able to compete with Amazon. We don’t think owners of Wal-Mart should be selling.

Comments
Insider Monkey Small Cap Strategy
Insider Monkey Small Cap Strategy

Insider Monkey beat the market by 52 percentage points in 24 months. Our beta is only 1.2 (don't click this link if beating the market isn't important to you).

Lists

Most Awesome Hip Hop Documentaries

Foods That Stain Your Teeth

Richest Doctors in the World

The Best Movie Sountracks Ever

The Highest Grossing Musicals on Broadway

The Most Successful Reality TV Stars

Cheapest Cities to Visit in the US

Most Expensive Summer Camps

Most Expensive Animals in the World

Most Expensive Specialty Crops in the World

Movies That Took Ages to Make

The Longest Hollywood Films Ever Made

Most Expensive Concert Stages

The Richest Bands of all Time

10 Most Corrupt Countries 2013 List

10 Countries with the Highest Quality of Life Index

Most Expensive Mattresses in the World

5 Smallest Countries by Land Area

The Ultimate Heartbreak Songs

Richest Teenagers in the World

10 Most Haunted Places in America

10 Best Places to Retire in Florida East Coast

Top 10 Places to See Before You Die

Top 8 Countries in the World Where Justice Prevails

10 Richest States in America

15 Wealthiest Countries in the World

Richest Singers in the World

Most Expensive Tasting Menu in New York City

Most Expensive Baby Items in the World

Most Expensive Hotel Suites in Vegas

Most Expensive Brunch in New York City

Most Expensive Beef Cuts in the World

25 Best Colleges to Get a Job

Top 10 US Supermarkets

The 25 Most Dangerous Cities in the World to Visit

Most Expensive Xbox Games

Top 11 Cities Where Billionaires Live

Top 10 Most Charitable Companies in America

Most Expensive Seafood in the World

The 10 Wildest Conspiracy Theories

The 10 Best Job Markets in the US

Top 10 Accounting Scandals of All Time

The 25 Biggest Cities in the World

Top 10 Best Paying Virtual Jobs

Most Expensive Leather Shoes in the World

Top 6 Things to Buy in March

The 10 Most Stressful Jobs in America – 2014 List

Top 10 Jobs for Introverted People

Top 10 Honeymoon Destinations in the World

Top 10 Highest Paying Jobs in the World

Subscribe

Enter your email:

Delivered by FeedBurner

X

Thanks! An email with instructions is sent to !

Your email already exists in our database. Click here to go to your subscriptions

Insider Monkey returned 47.6% in its first year! Wondering How?

Download a complete edition of our newsletter for free!