Soros Fund Management is probably one of the best known investment firms in the world. This former hedge fund turned into a family office was founded by the famed Hungarian-American investor, George Soros, recognized by many as “the Man Who Broke the Bank of England.” Between 1969 and 2000, Soros returned an average of 30.5% per year. In 2007, he came back from retirement after the quant liquidity crunch and managed to generate a 32% return. Even in 2008, he managed to return 8%, while most hedge funds were losing millions. The firm recently filed its 13F for the fourth quarter of 2015, disclosing an equity portfolio worth more than $6 billion. According to InsiderMonkey’s calculations, Soros’ 152 positions in companies with market caps above $1.0 billion returned about 9.6% during the fourth quarter, but posted a weighted average loss of 3.1% for the full 2015.
We believe that imitating hedge funds and other large institutional investors can be helpful in identifying stocks capable of outperforming the broader market. Through extensive research that covered portfolios of several hundred large investors between 1999 and 2012, we determined that following the small-cap stocks that large money managers are collectively bullish on, can generate monthly returns nearly 1.0 percentage points above the market (see more details here).
Synchrony Financial (NYSE:SYF)
– Shares Owned by Soros as of December 31: 7.12 Million
– Value of Holding as of December 31: $216.75 Million
During the fourth quarter, Soros Fund Management initiated a position in Synchrony Financial (NYSE:SYF). The stake, worth more than $216 million as of the end of the quarter, accounted for roughly 3.5% of his equity portfolio’s total value. Between October and December the stock lost 2.8% and it is down by 9.3% year-to-date. However, the company has been in the spotlight recently, as Barron’s said that the shares could gain as much as 40% later this year, taking into account its 8.9 forward (2017) earnings multiple that can appreciate on the back of loan growth. Also betting on this company is Phill Gross And Robert Atchinson’s Adage Capital Management, which also initiated a stake, comprising 21.64 million shares, during the last three months of 2015.
Level 3 Communications, Inc. (NYSE:LVLT)
– Shares Owned by Soros as of December 31: 3.18 Million
– Value of Holding as of December 31: $173.37 Million
In Level 3 Communications, Inc. (NYSE:LVLT), the fund boosted its exposure by almost 60%. Increasing its stake in the company as well was Robert Pitts’ Steadfast Capital Management, which raised its position by 60% to 6.89 million shares. On Monday, the stock closed 1.6% in the green, after the company announced it had opened its first Latin American DDoS scrubbing center, in São Paulo, Brazil. Nonetheless, year-to-date, the shares have declined by almost 10%.
On the next page we will look into three more moves disclosed by Soros Fund Management heading into 2016.