Billionaire George Soros has filed his 13F for the first quarter of 2013, disclosing many of his long equity holdings as of the end of March to the SEC and consequently to the general public. Even though the information in these filings is a bit old by the time it is released, we think that there are still a couple ways it can be useful. First, the most popular small cap stocks among hedge funds earn an average excess return of 18 percentage points per year (learn more about our small cap strategy) and we imagine that other strategies are possible as well. Second, reviewing the moves that top managers have made can at least serve as a source of initial investment ideas for further research. Read on for three things we noticed when analyzing Soros’s most recent 13F compared to what he has previously reported owning (see Soros’s last several 13F filings).
Selling finance & insurance. At the beginning of 2013, the two largest stock positions by market value in Soros’s portfolio were Citigroup Inc (NYSE:C) and American International Group Inc (NYSE:AIG). The investor then slashed both stakes between January and March; his American International Group Inc (NYSE:AIG) position decreased in size by about two-thirds and he reported owning only about 540,000 shares of Citi (down from 8.1 million shares three months earlier). We’d note that none of his top ten picks according to the 13F were from the finance & insurance sector. AIG had briefly grabbed the title of most popular stock among hedge funds during the fourth quarter of 2012, but last quarter Apple Inc. (NASDAQ:AAPL) regained the #1 slot (read more about hedge funds’ favorite stocks). AIG currently trades at a significant discount to the book value of its equity, at a P/B ratio of 0.7. Citi is also seeing skepticism from the market in terms of the value of its assets, and it’s P/B happens to be 0.7 as well. This is the case even though Citi has nearly doubled in price over the last year. The bank’s forward earnings multiple of 10 is in line with that of its peers, though other large banks have generally been doing better over the last several quarters in terms of their net income.
Google. Soros was buying Google Inc (NASDAQ:GOOG) during the first quarter of 2013 and closed March with about 340,000 shares in his portfolio, making it the second largest equity position reported on the 13F. In the first quarter of 2013, Google Inc (NASDAQ:GOOG) experienced earnings growth of 16% versus a year earlier. The company continues to integrate its acquisition of Motorola Mobility Holdings, which has helped it take a leading role in tablets and smartphones, and also continues to generate earnings growth from its core advertising-related businesses such as search. Billionaire Stephen Mandel’s Lone Pine Capital has been another major shareholder in Google Inc (NASDAQ:GOOG) (check out Mandel’s stock picks).