George Soros’ Soros Fund Management and his son Jonathan Soros’ JS Capital are among the more than 700 hedge funds that we track. According to their 13F filings with the U.S. Securities and Exchange Commission for the period of March 31, and after scouring through the submitted data, we realized that both funds are betting on China. Although the two funds have substantially different public equity portfolio values, their investment in select China-based companies shows strong expectation for the Asian nation’s growth. At the end of the first quarter of 2015, the senior Soros’ fund had $10.16 billion in public equity portfolio value and more than $28 billion in assets under management, while the junior Soros had $394.76 million worth of stocks in his public equity portfolio. Our analysis revealed that the two have some similarities in their China-based stock picks. These are Vipshop Holdings Ltd – ADR (NYSE:VIPS), Alibaba Group Holding Ltd (NYSE:BABA), and Ctrip.com International, Ltd. (ADR) (NASDAQ:CTRP).
Why are we interested in the 13F filings of a select group of hedge funds? We use these filings to determine the top 15 small-cap stocks held by these elite funds based on 16 years of research that showed their top small-cap picks are much more profitable than both their large-cap stocks and the broader market as a whole. These small-cap stocks beat the S&P 500 Total Return Index by an average of nearly one percentage point per month in our backtests, which were conducted over the period of 1999 to 2012. Moreover, since the beginning of forward testing from August 2012, the strategy worked just as our research predicted, outperforming the market every year and returning 145% over the last 34 months, which is more than 85 percentage points higher than the returns of the S&P 500 ETF (SPY) (see more details).
Follow George Soros's Soros Fund Management
At the end of the first quarter of 2015, Soros Fund Management owned 3.80 million shares of Vipshop Holdings Ltd – ADR (NYSE:VIPS) with a market value of $111.93 million while his son’s JS Capital held 400,000 shares of the stock with a market value of $11.78 million. The company is a Chinese online retailer that sells branded products through flash sales, in which specific products are provided in limited quantities and sold within a specified period at deep discounts. The company’s performance in the first quarter of 2015 was quite impressive, posting a greater than 40% gain for the period. The number of hedge funds out of the ones we track that were invested in Vipshop Holdings Ltd – ADR (NYSE:VIPS) increased to 48, from 47 at the end of the fourth quarter of 2014. It was not only an increase in the number of hedge funds but also the invested capital, which jumped to $3.22 billion by March 31 from $2.16 billion at the end of the previous quarter. Other hedge funds that also had stakes in the stock at the end of the first quarter were Chase Coleman‘s Tiger Global Management LLC with 15.95 million shares, and Stephen Mandel’s Lone Pine Capital with 10.94 million shares.
Chinese online retail giant Alibaba Group Holding Ltd (NYSE:BABA) also attracted both Soros Fund Management and JS Capital to take up positions in it stock. The elder Soros held a total of 4.44 million shares of the company with a market value of $369.97 million, while his son held 54,955 shares of the company valued at $4.57 million. The company got a lot of cash from its $25 billion initial public offering and ended up investing some of that into several corporate ventures. Among other things, Alibaba Group Holding Ltd (NYSE:BABA) is set to launch a video streaming service, which is modeled on Netflix. The company also launched an online bank, MYbank, a few days ago through one of its affiliates, a strategic step to capture small businesses in China that have been underserved by traditional banks. A total of 86 hedge funds out of the more than 700 that we tracked were invested in the stock at the end of the first quarter, down from 90 at the end of the previous quarter. A few of these were billionaire Rob Citrone‘s Discovery Capital Management with 8.77 million shares, and billionaire Andreas Halvorsen’s Viking Global with 6.94 million shares.
Follow Jonathan Soros's JS Capital
At the end of the first quarter of 2015, Soros Fund Management and JS Capital were also both invested in Ctrip.com International, Ltd. (ADR) (NASDAQ:CTRP), a China-based online travel booking services company. According to the two funds’ 13F filings, Soros Fund Management held a total of 555,000 shares of the company valued at $32.53 million, while JS Capital held 40,000 shares with a market value of $2.35 million. The company has been facing a fierce e-travel battle with its competitors in China, such as eLong, Inc. (ADR) (NASDAQ:LONG) and Qunar Cayman Islands Ltd (NASDAQ:QUNR). However, in the first quarter of 2015, the company showed great progress that brought some level of confidence to it and its investors. Ctrip.com International, Ltd. (ADR) (NASDAQ:CTRP) posted revenue growth of 46%, with all three of its segments (Accommodations, Transportation, and Packaged Tours) all registering revenue growth. The growth is attributed to the company’s investment in an online booking app, which has led to enormous growth in bookings, hitting 800 million in its most recent reporting period. The management has, for the current quarter, given revenue growth guidance of between 45 and 50%. A total of 45 hedge funds out of the more than 700 that we track were invested in the stock at the end of the first quarter, up from 38 at the end of the last quarter of 2014. Billionaire Daniel S. Och emerged as the biggest shareholder among them with 4.64 million shares, followed by Lei Zhang’s Hillhouse Capital Management, which held 4.26 million shares.
Disclosure: None
