5 Big Buys By Soros Fund Management

Includes: AIG, CF, GOOG, JNJ, PXD
by: Efsinvestment

By: Aubrey Tabuga

Soros Fund Management, the privately held American hedge fund management company founded by George Soros, has earned the reputation of being one of history's most successful finance managers. Its average annual rate of return is an outstanding 20 percent for over 4 decades. The firm had $9.264 billion of assets under its management as of the end of September according to whalewisdom.com. Recently, George Soros articulated that the Euro crisis is self-created and is inducing the EU into a long-term depression. The investor also expressed his willingness to commit financial resources to helping Greece but also stated that helping the country has to be a joint European effort.

Soros' hedge fund purchased 79 new stocks in the latest quarter and sold 69. I bring you the biggest buys by Soros. These are American International Group, Inc. (NYSE:AIG), Johnson & Johnson (NYSE:JNJ), CF Industries Holdings, Inc. (NYSE:CF), Pioneer Natural Resources Co. (NYSE:PXD), and Google Inc. (NASDAQ:GOOG).


Shares Held

Market Value

% of Portfolio

% Change in Shares

Stock Performance (YTD)

EPS growth next 5Y

Johnson & Johnson







American International Group, Inc.







CF Industries Holdings, Inc.







Pioneer Natural Resources Co.







Google Inc.







Sources: whalewisdom.com & finviz.com

Johnson & Johnson

Johnson & Johnson (JNJ) is a giant manufacturer, developer and seller of healthcare products. In the latest quarter, the company, despite previous expectations of a fall in earnings, had surpassed projections and the previous year's figure. Its revenues have swelled to over $17 billion, representing an increase of 6.5%. These are reported to be attributed to increased R&D expenditures and its recent pricey acquisitions.

The hedge fund manager increased its holdings in the healthcare company fifteen-fold in the latest quarter. It initiated this position in the second quarter this year, the first in a period of five straight quarters. JNJ currently holds 1.91% of the fund's total portfolio.

The company's main strengths are its profitability, respectable record in dividend payment, and robust stock price. JNJ is a high dividend stock with a yield of 3.52%. The company is generating profits with its 12.39 percent margin. Earnings are expected to continue to grow at an annual rate of 6.45% in the next five years. The stock has been performing well. Compared to last year, the performance has improved by 8.57%. The company's forward P/E ratio is 12.62, way lower than the current one at 22.79.

American International Group, Inc.

American International Group, Inc. (AIG) is a leading provider of insurance products and services to individual, commercial and institutional clients worldwide. This New York-based company operates under the segments - Chartis, SunAmerica Financial Group and Aircraft Leasing. Recently, TheStreet Ratings reiterated a hold for the company which got a score of C. The insurance provider, along with others, is reported to be in negotiation with the PICC Group into becoming cornerstone investors in the latter's Hong Kong IPO.

This is the first time in at least 9 quarters that Soros made a position in the insurance provider. It is the hedge fund's biggest buy in the third quarter and currently its biggest holding at 5.39% share. The purchase had amounted to about $500 million based on whalewisdom.com estimate.

Despite AIG's wide profit margin at 38.83%, its EPS is going down. In fact, the EPS estimate for next year is 3.50, way lower than the current one at 14.41. Nevertheless, it is likely to climb in the next five years at 14.73 percent annually. The stock performance also increased this year by 32.24% from last year. The forward P/E is 8.77 while its current P/E is 2.13.

CF Industries Holdings, Inc.

CF Industries Holdings, Inc. (CF) engages in the manufacture and distribution of nitrogen and phosphate fertilizer products. Its two segments serve agricultural and industrial customers worldwide. The company has just recently earned the coveted five-star ranking based on aggregated intelligence of investors in the Motley Fool CAPS. CF is one of Soros' biggest buys in the third quarter. The hedge fund increased its holdings almost ten-fold. CF, therefore, formed 1.85% of the investment manager's total portfolio as of the end of September. Soros started buying CF shares again in the previous quarter. The last time the company appeared in Soros' 13F was in the first quarter of 2011.

The attractiveness of CF Industries lies in its profitability, improving stock performance, and robust past sales record. The current profit margin is at a remarkable 31.77%. The stock price had gained 35.80% from last year. Meanwhile, sales level had expanded by an average annual rate of 24.57% within the previous 5 years. However, a growing concern is the company's ability to grow earnings. Although the EPS has astoundingly grown three-fold this year, future long-term growth is quite limited to 1.75 percent per year.

Pioneer Natural Resources Co.

Pioneer Natural Resources Company (PXD) is an independent oil and gas exploration and production company that operates in the United States and South Africa. Last week, TheStreet Ratings reiterated the Irving-based company as a buy with a score of B. Nineteen analysts also rated the company as a buy while 6 rate it a hold. No one gave it a sell. In the third quarter, Soros initiated a huge position in Pioneer amounting to $145 million or 1.57% of its total holdings. This is the biggest position that Soros has made so far in Pioneer. This is also the first time that the company appeared in the 13F of Soros in the last five quarters. It is recalled that Soros sold all its PXD shares in the second quarter of 2011.

The company has a decent profit margin of 10.68%. The company has shown robust sales performance in the past, growing by an average annual rate of 13.25%. Its earnings potential is really impressive based on its long-term annual growth estimate of 18.08% for the 5 years ahead. The stock is also performing rather robustly. Compared to last year, stock price has leaped by 13.85%. Its forward P/E is 18.85, just half of the current one at 47.34.

Google Inc.

Google Inc. (GOOG) is a massive technology company that operates a set of websites and other online content that include Gmail, Adsense, Chrome, and Google Maps. The Android maker is soon to face an equally huge tech company Microsoft in Seattle for a patent lawsuit. This is speculated as one that can expose both companies' closely guarded financial situations. Google is one of the potential buyers of Kodak, which is at the brink of bankruptcy. It is also competing with Apple's mapping app as it prepares to submit its version to the Apple iTunes store in a yet undisclosed time.

Soros bought $142 million worth of Google shares in the third quarter. The company constituted 1.54% of the hedge fund's total portfolio as of the end of September. It has been a consistent item in Soros' 13F Filing except for the previous quarter.

The company is a profit generator with a margin of 22.20%. Google's sales grew at a massive 29.01% per year in the past 5 years which is tremendous for such a huge company.

Investors are in for great earnings as these are estimated to grow at a remarkable annual rate of 15.70% in the next 5 years. Its TTM EPS of 31.92 is likely to jump to 46.38 next year. Meanwhile, the stock performance has grown rather sluggish at 1.03% from the previous year. The stock's forward P/E ratio of 14.07 is also quite lower than the current ratio of 20.44.

Disclosure: I have no positions in any stocks mentioned, and no plans to initiate any positions within the next 72 hours.

Business relationship disclosure: EfsInvestment is a team of analysts. This article was written by Aubrey Tabuga, one of our equity researchers. We did not receive compensation for this article (other than from Seeking Alpha), and we have no business relationship with any company whose stock is mentioned in this article.

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