Even though they are two of the most well-known billionaire investors, George Soros and Louis Moore Bacon don’t otherwise have a lot in common. However, Moore is a global macro trader, a genre that also includes Georges Soros. They both participate in most of the global markets by focusing their moves on future trends of inflation, economic growth, and central bank policy, among other factors. Interestingly, at the beginning of the 1980’s Bacon started working as a futures broker at Shearson Lehman Brothers, while some of his clients included another billionaire, Paul Tudor Jones, who was a trader for George Soros’ Quantum Fund at that time. It might have happened that Bacon gained some insight into their style of trading from those interactions, and that’s probably why 15% of Moore and Soros’ portfolios are in identical stocks, as they agree on a handful of companies according to their most recent 13F filings. The billionaires have come to a consensus on these four tech stocks among others: Alibaba Group Holding Limited (NYSE:BABA), Baidu Inc. (NASDAQ:BIDU), Yahoo! Inc. (NASDAQ:YHOO) and Facebook Inc. (NASDAQ:FB).
At Insider Monkey, we track hedge funds’ moves in order to identify actionable patterns and profit from them. Our research has shown that hedge funds’ large-cap stock picks historically underperformed the S&P 500 Total Return Index by an average of seven basis points per month between 1999 and 2012. On the other hand, the 15 most popular small-cap stocks among hedge funds outperformed the S&P 500 Index by an average of 95 basis points per month (read the details here). Since the official launch of our small-cap strategy in August 2012, it has performed just as predicted, returning over 142% and beating the market by more than 84 percentage points. We believe the data is clear: investors will be better off by focusing on small-cap stocks utilizing hedge fund expertise (while avoiding their high fees at the same time) rather than large-cap stocks like Facebook and Alibaba.
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Alibaba Group Holding Limited (NYSE:BABA) is up first on our list of tech stocks owned by both George Soros and Louis Bacon. Soros Fund Management reported in its most recent 13F filing that it owns 4.44 million American Depositary Shares (ADS) valued at $369.97 million in Alibaba, whereas Moore Capital Management holds a slightly smaller equity stake of 2.13 million ADSs worth $176.91 million. The American Depository Shares of Alibaba have dropped by 20% since the beginning of the current year; however, a number of research hubs, including the research team at BNP Paribas, maintain a “Buy” rating on Alibaba, with price targets over $100. Recently, Alibaba has been in talks to buy 25% of India’s largest local manufacturer, Micromax, for roughly $700 million. Alibaba is attempting to penetrate the fast-growing smartphone sector in that country through the acquisition of local brands, because foreign brands tend to struggle on the Indian market. Within our database, Rob Citrone’s Discovery Capital Management represents the largest investor in Alibaba Group Holding Limited (NYSE:BABA), holding 8.77 million shares.
Moving on to another Chinese tech company owned by the two billionaires, George Soros disclosed owning 358,650 American Depositary Receipts (ADRs) in Baidu Inc. (NASDAQ:BIDU), which are valued at $74.74 million as of March 31. Louis Bacon’s holding in the Chinese-language Internet search provider amounts to 319,689 ADRs valued at $66.62 million, after decreasing his stake from 456,185 ADRs reported a quarter ago. Baidu shares declined by over 10% year-to-date and are currently trading at $203. Despite having destructive operating margins, Baidu’s revenues have been increasing for 25 consecutive quarters. Analysts are slightly surprised by the growth pace of the company, which resembles the growth of a small-cap company. Even though Baidu has been mainly focusing on the Chinese market, the company might continue to expand beyond those borders. From the pool of over 700 hedge funds that we track, Stephen Mandel’s Lone Pine Capital is the largest shareholder in Baidu Inc. (NASDAQ:BIDU), owning 5.28 million ADRs.
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Soros and Bacon made opposite moves in Yahoo! Inc. (NASDAQ:YHOO) during the most recent quarter. Soros Fund Management reported the sell-off of 549,044 shares in Yahoo, ending the quarter with 1.32 million shares valued at $58.56 million. In contrast, Moore Capital Management increased its position in the company to 248,445 shares, which are worth $11.04 million. The shares of Yahoo are currently trading at $40 per share, marking a decrease of 20% year-to-date. However, the company might achieve a turnaround soon enough as it hopes to replicate the success of last year’s partnership with Mozilla Firefox, the deal which allowed Yahoo to increase its search share in the United States. Yahoo has recently formed a new partnership with Oracle that will allow the tech giant to make use of new Java software installations, which might eventually assist Yahoo in increasing its search share and user base. Within our database, Daniel Och’s OZ Management represents the largest equity holder in Yahoo! Inc. (NASDAQ:YHOO), with 14.65 million shares.
Yet again, the two billionaires have taken different roads when it comes to another tech stock, this time Facebook Inc. (NASDAQ:FB). George Soros decreased his position in Facebook to 124,114 shares that are worth $10.20 million, while Louis Moore Bacon enlarged his total holding in the company by 140,658 shares to 480,368 shares which are valued at $39.49 million as of March 31. The stock has delivered a return of nearly 13% since the beginning of the year to $88 per share. Just recently, Facebook announced that its chat app, Messenger, will no longer require people to have a Facebook account to join. Mark Zuckerberg, the CEO of Facebook, has claimed that the company will start its monetization efforts as soon as its user base reaches one billion users. Hence, this update represents a massive business opportunity for Facebook in the future. Within our database, Philippe Laffont’s Coatue Management is the second-largest investor in Facebook Inc. (NASDAQ:FB) with 7.91 million shares, tailing Stephen Mandel’s Lone Pine Capital.
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