In this article, we discuss the top 10 stock picks of George Soros.
George Soros, the billionaire founder of Soros Fund Management, is famous on Wall Street for making hugely successful bets on currency fluctuations. As such, the news that his hedge fund owned some Bitcoin, the most popular cryptocurrency, gave a small boost to the price of the digital coin earlier this year. Dawn Fitzpatrick, who oversees the Soros Fund, told news platform CNBC in early October that the family office of the billionaire owned “some coins, but not a lot”. Fitzpatrick went on to reveal that the coin was no longer seen as just an inflation hedge.
George Soros’s Thoughts on China
Soros has also invited controversy in recent months after broadly criticizing the investment strategy of BlackRock, one of the largest investment firms in the world, for “pouring billions of dollars into China”. In an opinion piece for The Wall Street Journal, Soros termed the decision a “tragic mistake” and said that the bet on China would lose money for clients and also threaten the national security interests of the United States. The billionaire said that the fund had a “far from real” conception about state-owned and private enterprises in the Asian country.
Chinese stocks have slumped in recent months following the collapse of property giant Evergrande and a Beijing-sponsored crackdown against dual listed companies. Even without betting big in Chinese firms, Soros has managed to garner handsome returns on his investments. Some of the top stocks in the portfolio of Soros Fund Management at the end of the third quarter of 2021 included Amazon.com, Inc. (NASDAQ:AMZN), Alphabet Inc. (NASDAQ:GOOG), and IHS Markit Ltd. (NYSE:INFO), among others discussed in detail below.
Our Methodology
These were picked from the investment portfolio of Soros Fund Management at the end of the third quarter of 2021.
In order to provide readers with some context for their investment choices, the business fundamentals and analyst ratings for the stocks are also mentioned.
The hedge fund sentiment around each stock was calculated using the data of 867 hedge funds tracked by Insider Monkey.
Top Stock Picks of George Soros
10. Proterra Inc. (NASDAQ:PTRA)
Number of Hedge Fund Holders:
Proterra Inc. (NASDAQ:PTRA) is an automotive and energy storage firm. The hedge fund of George Soros entered the fourth quarter of 2021 with more than 7.7 million shares of the company in the portfolio worth more than $78 million.
Barclays analyst Brian Johnson recently raised the price target on Proterra Inc. stock to $11 from $10 and kept an Equal Weight rating, noting that the firm appeared on track to meet fourth quarter revenue targets.
At the end of the third quarter of 2021, 20 hedge funds in the database of Insider Monkey held stakes worth $124 million in Proterra Inc., compared to 23 the preceding quarter worth $338 million.
Just like Amazon.com, Inc., Alphabet Inc., and IHS Markit Ltd., Proterra Inc. is one of the stocks attracting the attention of elite investors.
9. Marqeta, Inc. (NASDAQ:MQ)
Number of Hedge Fund Holders: 20
Marqeta, Inc. (NASDAQ:MQ) owns and runs a cloud-based application programming interface platform. Soros Fund Management, as of the end of September, had over 4 million shares of the company worth $88 million in the portfolio.
Marqeta, Inc. recently announced that it had expanded a partnership with Klarna, a global retail bank, into 13 new markets in Europe. Marqeta has a market cap of more than $9 billion.
Among the hedge funds being tracked by Insider Monkey, Connecticut-based investment firm Lone Pine Capital is a leading shareholder in Marqeta, Inc. with 2.6 million shares worth more than $57 million.
In its Q2 2021 investor letter, Baron Funds, an asset management firm, highlighted a few stocks and Marqeta, Inc. (NASDAQ:MQ) was one of them. Here is what the fund said:
“We participated in the IPO of Marqeta, Inc., a modern card-issuing platform that enables companies to run their own payment card programs. Marqeta is built on modern technology and can be accessed with open APIs that are easy to use and developer-friendly, resulting in most of its clients coming from word-of-mouth referrals instead of outbound sales. The modern technology stack allows for the programmability of cards, enabling companies to authorize transactions in real time and control how the cards are used. This programmable nature means that cards can be used in a range of use cases for which traditional cards are not suitable. Examples include cards with spending controls for different employees and purchase categories as well as cards for food delivery companies that restrict spending only to authorized purchases to reduce fraud. While there are other card issuers, none can provide the level of functionality at large scale that Marqeta can. Marqeta generates revenue from the interchange fees earned on transactions that are processed on its cards. It shares a portion of this with its customers, meaning that card solutions become a revenue stream rather than a cost center. Many of the company’s clients are fast growing, and Marqeta continues to innovate the features on its platform, which in turn give its clients more tools with which to develop new card payment products and experiences. Given a largely fixed cost structure, Marqeta earns high incremental margins on each dollar spent on its cards. Led by founder-CEO Jason Gardner, we believe that Marqeta is a high-quality, differentiated business in the FinTech space with a long runway for growth.”
8. Aramark (NYSE:ARMK)
Number of Hedge Fund Holders: 29
Aramark (NYSE:ARMK) provides food, facilities, and uniform services to a variety of industries. In the filings for the third quarter, Soros’s fund detailed that it owned 3 million shares of the company worth $101 million, representing 1.86% of the portfolio.
Stifel analyst Shlomo Rosenbaum has a Buy rating on Aramark stock with a price target of $48. In a recent investor note, the investor backed the firm to improve margins and increase free cash flow in the coming months.
At the end of the third quarter of 2021, 29 hedge funds in the database of Insider Monkey held stakes worth $1.14 billion in Aramark, compared to 36 the preceding quarter worth $1.12 billion.
7. Activision Blizzard, Inc. (NASDAQ:ATVI)
Number of Hedge Fund Holders: 80
Activision Blizzard, Inc. (NASDAQ:ATVI) develops and publishes interactive entertainment content. Latest filings show that Soros Fund Management is long on more than 1.4 million shares in the firm worth $108 million, representing 2% of the portfolio.
Activision Blizzard, Inc. stock has benefited from a six-month long rally in video games sales that ended in November. As a new variant of COVID-19 rises, video game sales are expected to go up again.
At the end of the third quarter of 2021, 80 hedge funds in the database of Insider Monkey held stakes worth $4.2 billion in Activision Blizzard, Inc., compared to 78 in the preceding quarter worth $3.6 billion.
In its Q1 2021 investor letter, Cooper Investors, an asset management firm, highlighted a few stocks and Activision Blizzard, Inc. (NASDAQ:ATVI) was one of them. Here is what the fund said:
“The portfolio established a position in video game publisher Activision Blizzard. As a watchlist company we have followed Activision for several years. As a reminder the role of the watchlist is to allow us to focus on a select group of companies where we seek to observe important signals around either value latency, industry trends or management behaviour that portend attractive investment propositions.
Technology can often play a disruptive role in content, however video games are a clear beneficiary of technology, both in terms of more immersive and realistic gaming experiences as well as the monetisation opportunities this creates.
In order to benefit from these trends, video game publishers must be owners of unique IP. Activision Blizzard fits this bill perfectly boasting a portfolio which includes franchises such as Call of Duty, World of Warcraft and Diablo just to name a few.
The business is run by CEO Bobby Kotick, who together with Chairman Brian Kelly purchased the foundation assets for the company for US$400k in the early 1990s. Today Activision has a market capitalisation of over US$70bn. Over the last few years Bobby and his management team have refocused resources onto their best IP, with the goal of capitalising on the aforementioned industry tailwinds.
We saw the benefits of this in 2020 with the release of Call of Duty Mobile and Free-to-Play versions (with in game micro transactions) complimenting the traditional core console game. Engagement increased materially and due to the very favourable economics of content publishing, Operating Income more than doubled for the Call of Duty Franchise. Even adjusting for the impact of lockdowns, this is a phenomenal outcome.
Activision has 3-4 key pieces of IP with which they plan to repeat this playbook over the next couple of years. If they can replicate the success of Call of Duty, even in part, we see material upside to the free cash flow power of the business. Further, revenue sources are broadening which will move the profile away from a traditional lumpy annual release cycle of the old video game model towards one of a more recurring nature. This will transition Activision from a publishing to a services business, likely attracting a higher multiple than the current mid-low 20x FCF which is broadly in line with the market. To summarise, we see significant value latency and a pathway to double digit returns over the medium term.”
6. FIGS, Inc. (NYSE:FIGS)
Number of Hedge Fund Holders: 21
FIGS, Inc. (NYSE:FIGS) operates as a healthcare apparel and lifestyle company. Soros’s fund holds a stake in the firm worth $116 million, consisting of over 3.1 million shares.
On November 2, investment advisory Piper Sandler maintained an Overweight rating on FIGS, Inc. stock with a price target of $45, noting that the firm was “well poised” to exceed market estimates for sales in the coming months.
At the end of the third quarter of 2021, 21 hedge funds in the database of Insider Monkey held stakes worth $821 million in FIGS, Inc., up from 12 in the previous quarter worth $1.1 billion.
Along with Amazon.com, Inc., Alphabet Inc., and IHS Markit Ltd., FIGS, Inc. is one of the stocks on the radar of hedge funds.
5. Alphabet Inc. (NASDAQ:GOOG)
Number of Hedge Fund Holders: 156
Alphabet Inc. is a diversified technology company with core interests in the advertising business. The hedge fund of George Soros entered the fourth quarter of 2021 with 59,482 shares of the company in the portfolio worth more than $159 million.
Tigress Financial analyst Ivan Feinseth recently reiterated a Strong Buy rating on Alphabet Inc. stock and raised the price target to $3,540 from $3,185, noting that the firm was driving greater functionality through a focus on artificial intelligence.
Among the hedge funds being tracked by Insider Monkey, London-based investment firm TCI Fund Management is a leading shareholder in Alphabet Inc. with 2.9 million shares worth more than $7.8 billion.
In its Q1 2021 investor letter, Artisan Partners, an asset management firm, highlighted a few stocks and Alphabet Inc. (NASDAQ:GOOG) was one of them. Here is what the fund said:
“Large-cap tech companies have been resilient through the pandemic—Alphabet among them. A top contributor, Alphabet’s Play Store and Google Cloud are in demand as businesses accelerate online activity which, along with strong YouTube user growth, is helping stabilize temporarily weaker search ad revenue trends. Through the lens of our disciplined bottom-up research process, we view Alphabet as one of the best businesses in the world, capable of expanding revenues at a rapid rate for years to come, with a bullet proof balance sheet and an average asking price. It’s a name we’ve owned since 2012 and for which we continue to have high hopes regarding future prospects.”
4. IHS Markit Ltd. (NYSE:INFO)
Number of Hedge Fund Holders: 64
IHS Markit Ltd. provides business analytics and related solutions. Soros Fund Management, as of the end of September, had over 2.4 million shares of the company worth $284 million in the portfolio.
In November, the US Department of Justice granted IHS Markit Ltd. approval to merge with market research firm S&P Global in a deal worth $44 billion. The deal is now awaiting regulatory approval from authorities in the United Kingdom.
At the end of the third quarter of 2021, 64 hedge funds in the database of Insider Monkey held stakes worth $6.7 billion in IHS Markit Ltd., up from 61 in the previous quarter worth $5.9 billion.
In its Q1 2021 investor letter, Artisan Partners, an asset management firm, highlighted a few stocks and IHS Markit Ltd. (NYSE:INFO) was one of them. Here is what the fund said:
“We ended our campaign in IHS Markit. IHS Markit is a global provider of information services to the financial services, automotive and energy sectors. Since beginning our investment campaign in 2009, we have been attracted to the company’s position relative to the meaningful secular tailwind driving demand for data and analytics to help guide business decisions. The company announced in Q4 it is merging with S&P Global, one of the largest credit ratings agencies globally and a provider of benchmarks, data and analytics to the global capital and commodities markets. We believe the combination provides a good level of cost and revenue synergies which will help drive profit growth, and S&P Global has a solid track record of acquiring and integrating new businesses. However, we exited our position as the combined entity will be well beyond our mid-cap market cap mandate.”
3. Amazon.com, Inc. (NASDAQ:AMZN)
Number of Hedge Fund Holders: 242
Amazon.com, Inc. retails consumer products and subscriptions. In the filings for the third quarter, the fund detailed that it owned 91,961 shares of the company worth $302 million, representing 5.57% of the portfolio.
Cowen analyst John Blackledge recently raised the price target on Amazon.com, Inc. stock to $4,500 from $4,300 and kept an Outperform rating, terming the stock “The Best Idea for 2022” and a “Top Mega Cap”.
Among the hedge funds being tracked by Insider Monkey, London-based investment firm Citadel Investment Group is a leading shareholder in Amazon.com, Inc. with 3.9 million shares worth more than $12.8 billion.
In its Q1 2021 investor letter, Hayden Capital, an asset management firm, highlighted a few stocks and Amazon.com, Inc. (NASDAQ:AMZN) was one of them. Here is what the fund said:
“Amazon (AMZN):We sold our last remaining stake in Amazon this quarter. Amazon was our longest-running investment holding, after having originally purchasing it at the inception of Hayden in 2014, at a price of ~$317.
I gave some details of how Amazon has progressed over these past 6.5 years in last year’s Q2 2020 letter, which partners can find here (LINK). The company has executed amazingly well over this tenure, with revenues up ~3.3x and since our initial purchase, and reported operating income up ~30x over that period.
Generally, I believe there are three reasons to sell an investment:1) we recognize our initial thesis is wrong (sell out as quick as possible), 2) we have a significantly higher returning opportunity to redeploy the capital into (sell-down to fund the new investment), or 3) the company is maturing and hitting the top part of it’s S-curve / business lifecycle, so the business has fewer places to reinvest its capital internally. As such, the future returns will likely be lower than the past. This investment thus becomes a “source of capital” in the future, as we fund earlier-stage investment opportunities.
In the case of Amazon, we decided to sell due to the third scenario. I’m sure Amazon will continue to generate value for shareholders and continue to keep pace with the broader technology sector. However, I’m just not confident it’s as attractive an investment as when we first invested.
With ~51% of US households having an Amazon Prime account (and with very low churn), each of these households continuing to increase their annual spend with Amazon, and few / no real competitors in sight, Amazon is a dominant force that will only continue to accrue value as consumers continue to move from offline to online purchases for their everyday needs. Likewise, the “cash-flow machine” of Amazon Web Services is in a similar position of strength, with AWS now having ~32% market share and continuing to grow at +30% y/y. Because of this, I think Amazon is probably one of the safest investments in the technology sector today.
So why did we decide to sell the investment then? Simply put, Amazon is …”read the entire letter here]
2. D.R. Horton, Inc. (NYSE:DHI)
Number of Hedge Fund Holders: 51
D.R. Horton, Inc. (NYSE:DHI) operates as a homebuilding firm. Latest filings show that Soros Fund Management is long on more than 4.3 million shares in the firm worth $362 million, representing 6.7% of the portfolio.
D.R. Horton, Inc. pays a regular and healthy dividend with a history of increases stretching back more than two decades. In November, the firm declared a quarterly dividend of $0.225 per share, an increase of 12.5% from the previous dividend of $0.200.
Among the hedge funds being tracked by Insider Monkey, London-based investment firm Egerton Capital Limited is a leading shareholder in D.R. Horton, Inc. with 8.5 million shares worth more than $722 million.
1. Liberty Global plc (NASDAQ:LBTYA)
Number of Hedge Fund Holders: 34
Liberty Global plc (NASDAQ:LBTYA) provides communications services. According to 13F data, the company is the largest holding of the hedge fund. It holds a stake in the firm worth $673 million, consisting of over 3.9 million shares.
In September, Jefferies analyst Ulrich Rathe upgraded Liberty Global plc (NASDAQ:LBTYA) stock to Buy from Hold and raised the price target to $36.40 from $28.30, backing the firm to double free cash flow in the next three years.
At the end of the third quarter of 2021, 34 hedge funds in the database of Insider Monkey held stakes worth $791 million in Liberty Global plc (NASDAQ:LBTYA), up from 30 in the preceding quarter worth $806 million.
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This article is originally published at Insider Monkey.
