George Soros, the man who broke the bank of England in early 90s, is among the most famous hedge fund managers in the world. Soros Fund Management, founded in 1969 by George Soros, is run by Soros and his sons. According to the latest 13F filings from Edgar Online, the fund has $5.2 billion of assets invested in equities. Share of technology stocks in portfolio is 21.23%, followed by services [19.85%], and healthcare [14.11%]. Here, is a brief analysis of Soros’s three latest big sells and four big buys.
SPDR Gold Trust (GLD): There has been a gold-mania going on in this century. Gold became highly-overpriced as I mentioned here, and here. SPDR’s largest shareholders have already started to sell their stocks. Soros reduced his gold holdings by -98.95%. It is expected that the extreme volatility will lead more people to sell their gold stocks. Although the worries on Euro and Dollar gave a boost to gold and silver for a short time, sooner or later this trend will weaken. It is quite hard to connect inflation with gold prices. As Professor Menzie Chinn suggests in econbrowser blog, reality of inflation is much different than the common speculations. I expect the inflation to be at most 5% at the worst scenario which is insufficient to explain the 166% increase since 2006. The rule is simple. What goes up must come down. Similar to the pop of techno-bubble, sooner or later the gold bubble will burst. Soros made his profit, and sold out at peak.
Plains Exploration & Production Company (PXP) acquires, explores, develops, and produces oil and gas primarily in the U.S. The company is favored by Goldman Sachs, as well as Dahlman Rose, and UBS. PXP’s market capital is $4.85 billion, and P/E is 42.48. Forward P/E is 11.95, and analysts estimate a 36.49% EPS growth next year. Gross margin is 70.78%, while the profit margin is 23.43%.
Debt-to assets ratio is next to becoming an unleashed troll as it is starting to get out of control. P/C is 1332.91, and earnings decreased by -33.12% this year. SMA20 is -3.15%, while SMA50 is -3.02%. Soros sold out all his holdings in PXP. Although the analysts have extremely optimistic opinions about future of the company, obviously George Soros does not believe in them. He sold all his PXP holdings. I suggest avoiding PXP until analyst estimations are confirmed.
Delta Air Lines, Inc. (DAL): The Georgia-based Delta airlines have a market capital of $9.73 billion. In 2010, the company’s profits amounted to $593 million. Trailing twelve month profit is $531 million. The airlines have razor thin profit margins, and Delta is no exception. The net profit margin is 1.6%. Operating margin stands ar 6.3%. Soros sold 88.03% of his Delta shares, yet still owns 0.21% of the company. On the other hand, Delta has a 5.87 forward P/E ratio, and a 0.63 P/S ratio. Analysts expect the company to have a 46.27% EPS growth next year. Earnings increased by 83.26% this quarter. SMA20 is 9.14%, while SMA50 is 13.54%. Debts are decreasing for the last three years. Delta has a promising future and can be a good short-term play. The low forward P/E ratio will surely attract many investors in soon future. David Tepper is extremely bullish about airline companies.
Motorola Solutions, Inc. (MSI): The Illinois-based MSI recently announced an expansion to Malaysia, where the company has so far invested about $4 billion. Motorola had significant financial results in the Q1 of 2011. Market capital of MSI is $15.88 billion, and P/E is 30.78. Forward P/E ratio is 17.99, while P/S is 0.82. Earnings had a whopping increase of 167.12% this year, and 265.68% this quarter. Profit margin is 5.5%. Insider transactions have increased by 28.93% over the last six months. Debts are decreasing for the last four years straight, as well as assets. SMA20 is 2.1%, while SMA50 is 5.69%. Soros Fund increased its MSI holdings by 610.43%, adding 3.8 million shares to its portfolio. I believe the momentum gained by Q1 results will continue for a while. There is still confusion between Motorola Solutions and Motorola Mobility (MMI). I think we might observe a divergence in the stock performance of the two in near future.
Visteon Corp. (VC): The automotive company, founded in 2000 has a market capitalization of $3.16 billion. Michigan-based Visteon has a low P/E ratio of 6.8. While earnings are expected to decrease this year, the low P/E ratio will surely attract investors. Profit margin is 11%. Institutional transactions have increased by 56.57% during the last three months. ROA is 21.53%, and ROE is 420.49%. After AGRO, Soros opened its second largest stake in VC by buying over 2 million shares, worth $133 million. Debts are almost buried to ground after 2008. On the other hand, analysts expect the company to have a -17.99% EPS growth next year. Soros owns 4.18% of the company, and I expect the share ownership to steadily increase. Visteon is a company to watch for.
CVS Caremark Corp. (CVS): The only company with a dividend policy in this list operates as a pharmacy company. CVS has a market capital of $52.07 billion, and a P/E of 15.55. P/S is 0.53, while forward P/E is 12.23. With a net profit margin of 3.43%, CVS offered a 1.30% dividend yield in 2010. Analysts expect the company to have an 11.36% EPS growth in the next five years, very similar to that of last five years [11.51%]. Debts are decreasing for the last four years, while assets are increasing. SMA50 is 8.09%, whereas SMA200 is 17.8%. UBS (UBS), Stifel Nicolaus (SF), Collins Stewart, Argus, and Jefferies&Co recommend buying CVS. Soros Fund increased its CVS holdings by 918.68%, buying more than 2.6 million shares. CVS’s recent dividend history is:
Apr 19, 2011
Jan 19, 2011
Oct 20, 2010
Jul 20, 2010
Disclosure: I have no positions in any stocks mentioned, and no plans to initiate any positions within the next 72 hours.
Additional disclosure: I am short Gold Futures.