By Aubrey Tabuga
Soros Fund Management is the privately held American hedge fund management company founded by George Soros, who has an impressive record of double-digit return per year in over 4 decades. He is one of history's most successful finance managers. As of the end of the latest quarter, the hedge fund had $9.264 billion of assets under its management, based on a whalewisdom.com compilation. George Soros invests a significant amount of money in equities. The famous manager has been very vocal is his take about the Euro crisis. He even extended his willingness to actively participate in helping Greece.
In the latest quarter, Soros reduced holdings in 27 stocks and sold 69 out. Since George Soros is one of the best-known names in the market, it is worth it to investigate his recent knows. In this article, I analyze his bold sales from a fundamental perspective. The company's big sells were those shares it held in Elan Corporation Plc (NYSE:ELN), Wal-Mart Stores (NYSE:WMT), Walt Disney (NYSE:DIS), EQT Corporation (NYSE:EQT), and Dish Network (NASDAQ:DISH).
% of Portfolio
EPS next 5Y
Elan Corporation Plc
Wal-Mart Stores Inc.
Walt Disney Co.
Dish Network Corp.
Sources: whalewisdom.com & finviz.com
Elan Corporation is a neuroscience-based biotechnology company operating in the US, Ireland and other countries. Its areas of business engagement are Alzheimer's disease, Parkinson's disease and Multiple Sclerosis. Recently, Elan's name is being dragged in an insider trading case involving a subsidiary of Steve Cohen's SAC Capital. Elan, however, is not facing charges. Meanwhile, the Dublin-based company is about to decide the proposed de-merger of Elan's Neotope business -- now known as the Prothena Business. The Prothena business comprises a significant portion of Elan's drug discovery segment.
Soros sold 72% of its holdings at ELN. That was equivalent to 3.333 million shares. Soros had increased its shares by 1012% in the first quarter of the current year. The stock had lost 24.75% from the previous year. Elan's profit margin in the latest quarter, -74.98% is one of its lowest in many years. Despite this, earnings are estimated to grow by a notable annual rate of 18.47% in the years to come.
Wal-Mart Stores Inc. is the giant retail company based in Bentonville, Arkansas. The company operated around 10,130 retail stores in 27 countries as of September in the current year. At present, the company has about 2 million full time employees.
Wal-Mart faced a labor backlash in one of the most important shopping days of the year- Black Friday. The protests were reported to involve thousands of Wal-Mart employees. The retail company witnessed a strike in the previous month in one of its stores in California. The company, after an investigation conducted by the Labor Department, paid around $5 million in back pay to workers illegally denied of overtime pay. Wal-Mart is likewise facing a lawsuit for violating minimum wage and overtime laws involving its temporary employees.
The asset manager had let go almost half, 2.344 million shares, of its holdings in Wal-Mart in the third quarter. Soros had just purchased 4.9 million shares in the preceding quarter. The WMT holding's share was down to 1.98% from 4.87%. The stock gained a positive 17.46% in its year-to-date price. The quarterly profit margin is quite stable, and earnings expected growth is encouraging, at 9.40% per year in the long-term. Also, the company has a remarkable record in paying increasing dividends to its investors in many years. However, it has to find solutions to its mounting labor glitches if it aims to maintain a robust performance.
The famous Walt Disney Company is an entertainment company operating worldwide. It is based in Burbank, California. Disney is planning to produce new Star Wars movies. The company had hired Michael Arndt to write the sequel of George Lucas' Star Wars franchise. Disney bought Lucas Film for $4 billion last month, therefore, acquiring the rights to create Star Wars sequels in the coming years. Meanwhile, the opening of the New Fantasyland in Florida's Magic Kingdom is creating excitement; a flying dragon is the new addition to its attractions.
Soros sold 27% of its shares in DIS in the latest quarter. It is noted that the hedge fund manager bought 1.062 million shares only in the previous quarter. After the sell was made, the holding constituted 0.44% of the total portfolio of Soros. The entertainment stock had gained 29.81% compared to its price from the previous year. Its growth prospects are high, at an estimated annual rate of 12.55% in the next 5 years. The company's attractiveness as in investment lies on its improving profitability and increasing dividend amount.
EQT Corporation is an integrated energy company operating in the United States. Its business operations are in production, midstream and distribution. The Pittsburgh-based company had shown increased revenues but lower earnings in the quarter ending in September 30. In fact, GAAP reported sales were 8.1% higher, at $364.1 million, than that for the same period last year at $336.7 million. The revenue was higher than expected. However, earnings had a deep dive from $1.19 per share in the prior year's third quarter to only $0.21.
The hedge fund gave up a quarter of its EQT holdings in the latest quarter. It is noted that Soros had just bought 1.510 million new shares in the second quarter. EQT stock had gained 14.88% from a year ago. The company's earnings are on the rise, with a long-term annual estimate of 16.78%. However, the profitability based on quarterly data is declining. It had peaked in the third quarter of 2011 at 23.86 and has since been going down. The company, however, remains a loyal payer of dividends, an encouragement to those who look for stable dividend earnings.
DISH Network Corporation is a Colorado-based company that provides broadcast satellite TV services. The company reported having served 13.967 million subscribers as of the end of 2011. Dish plans to launch a 4G network by utilizing its own wireless spectrum in its aim to compete with AT&T and Verizon. The Federal Communications Commission Chairman Julius Genachowski had expressed his supports to this company's bid to enter the wireless market. However, Dish is not happy about this, because the FCC's proposal has required the company to limit the amount of power of the spectrum, so it would not interfere with neighboring spectrum band. In this sense, the company will find it difficult to compete with the established networks.
Soros sold out a tenth of its investment in DISH in the third quarter. Nonetheless, the hedge fund still holds a significant position in the company. Soros doubled its DISH holdings in the previous quarter. The stock had gained 23.21% from the previous year, but the earnings per share are indeed a concern, as these are poised to grow at a low annual rate of only 0.22% in the years to come. Dish's profit margin has been dropping since the first quarter this year.
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.