Avoid These Billionaire George Soros’ Stock Picks

George Soros is the founder and chairman of Soros Fund Management. Soros ranks 15^th amongst billionaires in USA according to Forbes. Soros Fund Management’s latest 13F filing showed that the fund had an equity portfolio worth $3.99 billion as of the end of September, with 46% allocated towards the technology sector. At Insider Monkey, we backtested a portfolio of five of his largest positions in large-cap stocks (with a market cap of more than $20 billion) and calculated the returns thereof. These stocks returned 0.11% on an average each month from  between 2008 and 2012. During the same period S&P 500 Index gained 0.29%, outperforming Soros’ picks by 23 basis points per month, or 2.76% per year. Having said that, let’s take a closer look at some of Soros Fund Management’s top large-cap picks.

We follow over 700 hedge funds and other institutional investors and by analyzing their quarterly 13F filings, we identify stocks that they are collectively bullish on and develop investment strategies based on this data. One strategy that outperformed the market over the last year involves selecting the 100 best-performing funds and identifying the 30 mid-cap stocks that they are collectively the most bullish on. Over the past year, this strategy generated returns of 18%, topping the 8% gain registered by S&P 500 ETFs (see more details).

Williams Companies Inc (NYSE:WMB) was a new pick in Soros Fund Management’s 13F portfolio last quarter, with the fund having acquired more than 3.0 million shares during the third. With a value of $97.45 million, the position in Williams Companies Inc (NYSE:WMB) accounted for 2.44% of Soros Fund Management’s portfolio at the end of September. During the same period, billionaire Jim Simons‘ Renaissance Technologies exited its position in Williams Companies Inc (NYSE:WMB) by selling all 2.235 million shares, while David E. Shaw’s D.E. Shaw reduced its stake to 623,462 shares. For the quarter ended September 30, Williams Companies Inc (NYSE:WMB) reported revenues of $1,91 million, missing estimates of $1,971 million, but earnings of $0.20 per share topped the expectations by $0.04. The stock of the energy infrastructure company has a dividend yield of 2.63%. Overall, the smart money investors from our database were bullish on Williams Companies Inc (NYSE:WMB), with the number of funds long the stock increasing to 66 from 58, while the total value of their holdings advanced by 26% to $4.57 billion during the third quarter.

According to Soros Fund Management’s third-quarter 13F filing, the fund bought an additional 1.78 million shares of Barrick Gold Corporation (USA) (NYSE:ABX), taking the stake to 2.85 million shares valued at $50.5 million being held as at September 30. Other investors bullish on the stock included Arrowstreet Capital and David Siegel’s Two Sigma Advisers, which held 22.59 million and 1.83 million shares, respectively, at the end of September. With the US Federal Reserve having just increased interest rates and more hikes expected, gold prices may come under further pressure which could lead to a decline in the company’s prospects going forward. The stock has lost 68.4% in the last five years, during which time S&P gained more than 80%. According to our database, the number of hedge funds owning Barrick Gold Corporation (USA) (NYSE:ABX) declined by eight to 45, while the aggregate value of their holdings more than halved to $1.71 billion between July and September.

Soros Fund Management sold 427,300 shares of Zoetis Inc (NYSE:ZTS) during the last quarter and held 831,619 shares worth $43.2 million at the end of September. The stock which is trading very close to its 52-week high has gained 64% over the last five years versus 80% returned by S&P index over the same time period. The company recently announced the authorization of a $1.5 billion share repurchase program. One investor that recently closed its position in Zoetis Inc (NYSE:ZTS) is Bill Ackman’s Pershing Square. In its third-quarter letter to shareholders, Pershing said that it’s still confident in the company, in which it had held an activist position. The fund pointed out that Zoetis managed to develop and introduce “a number of value-enhancing initiatives including restructuring its supply chain, pursuing organic revenue growth opportunities while reducing costs, and setting a goal of increasing operating margins from ~25% in 2014 to ~34% by 2017” (read article). At the end of September, 44 funds from our database held shares of Zoetis, down by two over the quarter.

VMware, Inc. (NYSE:VMW) amassed 0.88% of Soros Fund Management’s 13F portfolio, as the fund boosted its stake by 379,224 shares to 482,094 shares worth $35.36 million during the quarter. D. E. Shaw & Co. also held 4.88 million shares of VMware, Inc. (NYSE:VMW) heading into the fourth quarter. Though the stock has rallied by 41% since January, it has lost 17% in the last five years. For its fourth quarter, analysts estimate VMware, Inc.’s (NYSE:VMW) revenue at $1.96 billion while earnings are expected to amount to $1.37 per share. Among other funds that we track at Insider Monkey, 43 funds held shares worth $1.80 billion constituting 8.1% of the company’s float at the end of September.

Soros Fund Management trimmed its stake in Paypal Holdings Inc (NASDAQ:PYPL) by around 6,000 shares to 811,385 shares worth $33.24 million at the end of September. On the other hand, Stephen Mandel’s Lone Pine Capital sold off its entire stake during the third quarter. Paypal Holdings Inc (NASDAQ:PYPL) expects fourth-quarter revenues between $2.92 billion and $2.99 billion and non-GAAP EPS between $0.40 cents and $0.42 cents. The number of funds in our database that own shares of Paypal Holdings Inc. (NASDAQ:PYPL) in their portfolios decreased by 10 to 74 during the third quarter while the total value of their positions declined to $4.6 billion from $5.4 billion.

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