In this article, we discuss the 10 top large-cap stock picks of George Soros.
In an era of soaring market valuations and growth-focused investment portfolios, old-school investors have been pushed to the periphery as a new generation of hedge fund managers takes over Wall Street. However, even though they may not command the media attention or match the energy of their younger counterparts, veteran investors like George Soros, the chief of Soros Fund Management, are still some of the most revered names in the finance world. Soros manages over $5.9 billion in assets at his fund.
The top holdings of the fund are concentrated in the services and technology sectors. The top ten stocks comprise over 45% of the portfolio of the fund. Between March and June this year, the value of the portfolio has jumped by $600 million, latest 13F filings reveal. During this period, the fund made new purchases in 112 stocks, sold out of 83 stocks, made additional purchases in 29 equities, and reduced holdings in 38 stocks. Soros is one of the richest men in the world and has a personal net worth of over $8.6 billion.
Some of the top large-cap stocks in the investment portfolio of Soros Fund Management at the end of the second 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. Over the years, Soros has pioneered a global macro investment strategy that focuses on high-leverage bets on the movements of currency rates, stocks, and bonds. His fund has an average annual rate of return of more than 20% over four decades.
The success of Soros has been an exception in the finance world that has struggled to produce more investors like him. The entire hedge fund industry is feeling the reverberations of the changing financial landscape. Its reputation has been tarnished in the last decade, during which its hedged returns couldn’t keep up with the unhedged returns of the market indices. On the other hand, Insider Monkey’s research was able to identify in advance a select group of hedge fund holdings that outperformed the S&P 500 ETFs by more than 86 percentage points since March 2017. Between March 2017 and July 2021 our monthly newsletter’s stock picks returned 186.1%, vs. 100.1% for the SPY. Our stock picks outperformed the market by more than 86 percentage points (see the details here). That’s why we believe hedge fund sentiment is an extremely useful indicator that investors should pay attention to. You can subscribe to our free newsletter on our homepage to receive our stories in your inbox.
George Soros of Soros Fund Management
Our Methodology
With this context in mind, here is our list of the 10 top large-cap stock picks of George Soros. These were picked from the investment portfolio of Soros Fund Management at the end of the second quarter of 2021. Only firms that have a market capitalization of more than $10 billion were selected.
The list is compiled according to the value of each holding in the portfolio of Soros Fund Management. The analyst ratings of the firms are also discussed to provide readers with some more context about their investment decisions.
The hedge fund sentiment around each stock was gauged using the data of 873 hedge funds tracked by Insider Monkey.
George Soros Stock Portfolio: Top Large-Cap Stock Picks
10. Elanco Animal Health Incorporated (NYSE:ELAN)
Number of Hedge Fund Holders: 42
Elanco Animal Health Incorporated (NYSE:ELAN) is placed tenth on our list of 10 top large-cap stock picks of George Soros. The firm operates as an animal health firm and is headquartered in Indiana. 13F filings reveal that Soros Fund Management owned 2.2 million shares in the company at the end of the second quarter of 2021 worth $78 million, representing 1.31% of the portfolio.
On August 4, investment advisory Credit Suisse assumed coverage of Elanco Animal Health Incorporated stock with an Outperform rating and a price target of $38. Katie Tryhane, an analyst at the advisory, issued the ratings update.
At the end of the second quarter of 2021, 42 hedge funds in the database of Insider Monkey held stakes worth $1.9 billion in Elanco Animal Health Incorporated, the same as in the preceding quarter worth $1.7 billion.
Just like Amazon.com, Inc., Alphabet Inc., and IHS Markit Ltd., Elanco Animal Health Incorporated is one of the stocks on the radar of hedge funds.
9. VEREIT, Inc. (NYSE:VER)
Number of Hedge Fund Holders: 22
VEREIT, Inc. (NYSE:VER) is ranked ninth on our list of 10 top large-cap stock picks of George Soros. The firm operates as a full service real estate company and is headquartered in Arizona. Government filings show that Soros Fund Management owned 2 million shares in the company at the end of June 2021 worth $92 million, representing 1.56% of the portfolio.
On July 26, investment advisory Capital One downgraded VEREIT, Inc. stock to Equal Weight from Overweight with a price target of $50. Chris Lucas, an analyst at the advisory, issued the ratings update.
Out of the hedge funds being tracked by Insider Monkey, Illinois-based investment firm Magnetar Capital is a leading shareholder in VEREIT, Inc. with 2.8 million shares worth more than $130 million.
In addition to Amazon.com, Inc., Alphabet Inc., and IHS Markit Ltd., VEREIT, Inc. is one of the stocks attracting the attention of institutional investors.
8. PPD, Inc. (NASDAQ:PPD)
Number of Hedge Fund Holders: 37
PPD, Inc. (NASDAQ:PPD) is a North Carolina-based firm that provides drug development services to the biopharma industry. It is placed eighth on our list of 10 top large-cap stock picks of George Soros. Latest data shows that Soros Fund Management owned 2 million shares in the company at the end of the second quarter of 2021 worth $96 million, representing 1.62% of the portfolio.
On August 4, investment advisory Credit Suisse assumed coverage of PPD, Inc. stock with a Neutral rating and a price target of $47.50. Katie Tryhane, an analyst at the advisory, issued the ratings update.
At the end of the second quarter of 2021, 37 hedge funds in the database of Insider Monkey held stakes worth $1.9 billion in PPD, Inc., up from 29 in the previous quarter worth $822 million.
In its Q2 2021 investor letter, DEVON Equity Management, an asset management firm, highlighted a few stocks and PPD, Inc. (NASDAQ:PPD) was one of them. Here is what the fund said:
“…We expect the ~US$4bn of ‘excess’ free cash flow generated from COVID related business to be reinvested into high returning businesses with a more sustainable earnings profile. This is already evident in Thermo’s strong M&A activity YTD, culminating in the US$20bn acquisition of PPD (PPD US).
PPD is a top tier CRO (Contract Research Organisation) which has been in and out of private equity ownership in recent times. To oversimplify, CRO’s effectively provide ‘outsourced’ R&D services across the entire customer spectrum (from big pharma to early stage biotech). Their value proposition varies slightly be customer, but ultimately comes down to quality of drug discovery / development and accelerating time to market (i.e. ‘Return on R&D investment’). CROs must stack up well on this metric vs in-house R&D spend, otherwise Firms would simply keep the spend 100% internal.”
7. Marqeta, Inc. (NASDAQ:MQ)
Number of Hedge Fund Holders: 35
Marqeta, Inc. (NASDAQ:MQ) is a California-based firm that owns and operates a cloud-based application programming interface. It is ranked seventh on our list of 10 top large-cap stock picks of George Soros. According to securities filings, Soros Fund Management owned 4 million shares in the company at the end of June 2021 worth $112 million, representing 1.89% of the portfolio.
On August 18, investment advisory Truist initiated coverage of Marqeta, Inc. stock with a Buy rating and a price target of $37, identifying the next-gen vCard solutions of the firm as a growth catalyst.
Out of the hedge funds being tracked by Insider Monkey, Connecticut-based investment firm Lone Pine Capital is a leading shareholder in Marqeta, Inc. with 17 million shares worth more than $490 million.
Amazon.com, Inc., Alphabet Inc., and IHS Markit Ltd. are some of the top stocks to buy now, alongside Marqeta, Inc..
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.”
6. Activision Blizzard, Inc. (NASDAQ:ATVI)
Number of Hedge Fund Holders: 78
Activision Blizzard, Inc. (NASDAQ:ATVI) is placed sixth on our list of 10 top large-cap stock picks of George Soros. The firm develops and publishes interactive entertainment content. It is headquartered in California. According to the latest filings, Soros Fund Management owned 1.5 million shares in the company at the end of the second quarter of 2021 worth $143 million, representing 2.41% of the portfolio.
On September 29, investment advisory Jefferies maintained a Buy rating on Activision Blizzard, Inc. stock with a price target of $120, noting there are multiple revenue drivers for the company in the next three years.
At the end of the second quarter of 2021, 78 hedge funds in the database of Insider Monkey held stakes worth $3.5 billion in Activision Blizzard, Inc., up from 76 in the preceding quarter worth $3.7 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.”
5. IHS Markit Ltd. (NYSE:INFO)
Number of Hedge Fund Holders: 61
IHS Markit Ltd. is ranked fifth on our list of 10 top large-cap stock picks of George Soros. The firm operates in the business research and consulting industry and is headquartered in London. 13F filings reveal that Soros Fund Management owned 1.3 million shares in the company at the end of the second quarter of 2021 worth $152 million, representing 2.56% of the portfolio.
On July 15, investment advisory Deutsche Bank reiterated a Buy rating on IHS Markit Ltd. stock and raised the price target to $127 from $123. Sameer Kalucha, an analyst at the advisory, issued the ratings update.
At the end of the second quarter of 2021, 61 hedge funds in the database of Insider Monkey held stakes worth $5.9 billion in IHS Markit Ltd., up from 54 in the previous quarter worth $4 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.”
4. Alphabet Inc. (NASDAQ:GOOG)
Number of Hedge Fund Holders: 155
Alphabet Inc. is a California-based technology company. It is placed fourth on our list of 10 top large-cap stock picks of George Soros. Government filings show that Soros Fund Management owned 70,255 shares in the company at the end of June 2021 worth $171 million, representing 2.89% of the portfolio.
On July 28, investment advisory Wedbush maintained an Outperform rating on Alphabet Inc. stock and raised the price target to $3,424 from $3,127, noting the firm had reported another “stellar” quarter of growth.
Out of 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 $7.3 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.”
3. Amazon.com, Inc. (NASDAQ:AMZN)
Number of Hedge Fund Holders: 271
Amazon.com, Inc. is a Washington-based diversified technology company. It is ranked third on our list of 10 top large-cap stock picks of George Soros. Latest data shows that Soros Fund Management owned 94,604 shares in the company at the end of the second quarter of 2021 worth $325 million, representing 5.48% of the portfolio.
On September 20, investment advisory RBC Capital initiated coverage of Amazon.com, Inc. stock with an Outperform rating and a price target of $4,150, noting that checks indicated that Amazon advertising was “just getting started”.
Out of the hedge funds being tracked by Insider Monkey, Chicago-based investment firm Citadel Investment Group is a leading shareholder in Amazon.com, Inc. with 3.8 million shares worth more than $13 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: 45
D.R. Horton, Inc. (NYSE:DHI) is placed second on our list of 10 top large-cap stock picks of George Soros. The firm operates as a homebuilding company. It is headquartered in Texas. According to securities filings, Soros Fund Management owned 4.2 million shares in the company at the end of June 2021 worth $385 million, representing 6.49% of the portfolio.
On July 26, investment advisory Wedbush upgraded D.R. Horton, Inc. stock to Outperform from Neutral and raised the price target to $125 from $94, noting that decline in mortgage rates and a core first time consumer base were growth catalysts for the firm.
Out of 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 8.3 million shares worth more than $752 million.
1. Liberty Broadband Corporation (NASDAQ:LBRDA)
Number of Hedge Fund Holders: 28
Liberty Broadband Corporation (NASDAQ:LBRDA) is ranked first on our list of 10 top large-cap stock picks of George Soros. The firm operates in the communications services industry and is headquartered in Colorado. According to the latest filings, Soros Fund Management owned 3.9 million shares in the company at the end of the second quarter of 2021 worth $690 million, representing 11.64% of the portfolio.
On August 24, investment advisory Pivotal Research maintained a Buy rating on Liberty Broadband Corporation stock with a price target of $267. Jeffrey Wlodarczak, an analyst at the advisory, issued the ratings update.
Out of the hedge funds being tracked by Insider Monkey, New York-based investment firm Eagle Capital Management is a leading shareholder in Liberty Broadband Corporation with 9 million shares worth more than $1.5 billion.
In its Q1 2021 investor letter, Alphyn Capital Management, an asset management firm, highlighted a few stocks and Liberty Broadband Corporation (NASDAQ:LBRDA) was one of them. Here is what the fund said:
“Liberty Broadband completed its merger with GCI, thereby collapsing one layer of the double discount to Charter Communications, presenting a good opportunity to trim that position as well.”
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This article is originally published at Insider Monkey.
