Soros Fund Management LLC is one of the most successful and high-profile hedge funds managed by billionaire hedge fund manager George Soros. Soros returned an average of 30.5% per year between 1969 and 2000. More recently in 2007, 2008 and 2009, his fund generated 32%, 8% and 29% return respectively for the investors.
The following is a list of Soros' top 10 new buys and position increases in the last quarter, as released in its most recent 13F filing with the SEC:
Top New Buys
|Stock||Symbol||Shares Bought Last Quarter||Shares Held - 03/31/2011|
|Charter Communications, Inc||CHTR||750,609||750,609|
|Itau Unibanco Banco Holding SA||ITUB||1,351,950||1,351,950|
|HCA Hldgs Inc||HCA||700,000||700,000|
|Wabash National Corp||WNC||1,900,000||1,900,000|
|BE Aerospace Inc||BEAV||507,600||507,600|
|Noble Energy Inc||NBL||180,000||180,000|
Top Position Increases
|Stock||Symbol||Shares Bought Last Quarter||Shares Held - 03/31/2011|
|Wells Fargo & company||WFC||2,936,300||3,505,100|
|CVS Caremark Corporation||CVS||2,639,376||2,926,676|
|Express Scripts Inc||ESRX||1,154,700||1,318,700|
|Polo Ralph Lauren Corp||RL||491,068||496,368|
|Gilead Sciences Inc||GILD||1,215,778||1,375,736|
|NII Holdings Inc||NIHD||1,146,798||1,213,498|
Here is my take on Soros' top five buys by market value:
Adecoagro SA is an agricultural company in South America, with operations in Argentina, Brazil and Uruguay. It is engaged in a range of businesses, including farming crops and other agricultural products, cattle and dairy operations, sugar, ethanol and energy production and land transformation.
My Take: Good buy with limited down side, particularly for those who are bullish on agriculture commodities
The company is trading near its IPO price and at ~16% discount to its NAV. For any agriculture commodities bull, who is expecting even a soft commodity boom scenario, it makes sense to invest in the company. According to Morgan Stanley analyst Javier Martinez, the company should actually be trading at a premium at this point in the cycle. All four sell side analyst covering this stock are bullish and have a mean target of $15.92 vs current price of $12.02.
One of the major concerns which is affecting the stock price is restrictions on land ownership by foreigners in Argentina. Adeco, due to its international shareholder base would be considered a foreign company and therefore subjected to limits in the purchase of new land. While restrictions in Argentina are an issue, the outcome is likely to involve a solution that does not entirely prevent foreigners from owning land. Also, Adeco's geographic diversification would place the company in a better position versus other Argentine farmers. Further, Adeco's land portfolio still has a significant amount of undeveloped land, implying NAV growth even without buying new land. Most of the negatives are already priced in the stock at these valuations and downside risk appears to be limited.
Visteon Corporation is a supplier of climate, interiors and electronics systems, modules and components to automotive original equipment manufacturers (OEMs) worldwide. The company supplies a range of integrated systems, modules and components to vehicle manufacturers for use in the manufacture of new vehicles.
My Take: Good buy from long term perspective, can be avoided in if you are trading short term
Visteon derives ~40% sales from emerging markets which are likely to see secular growth over next decade. Further, more than 60% of its head count is located in low cost countries and after emerging from restructuring it does not has any retiree healthcare obligations which give it a cost advantage. Asset sales (in particular its 50% stake in Yanfeng Inc, which is number one Chinese automotive interior supplier) can be another catalyst for the stock. JP Morgan analyst Himanshu Patel initiated coverage with a buy rating last week. The stock doesn't look pricey at 11.45x forward PE and appears a good buy from long term perspective.
Why avoid for short term? Visteon may see some pull back in the near term due to concerns over slowdown in China.
Wells Fargo & company is a diversified financial services company. The company operates in three segments: Community Banking, Wholesale Banking, and Wealth, Brokerage and Retirement.
My Take: Hold
WFC is one of the best placed U.S. financial services company given its peer-leading profitability metrics and growth prospects. There is also a good scope of reduction in its core and non-core operating expenses as it launches ‘Project Compass' efficiency initiative in Q3. However, WFC is already trading at a premium to other financial services peers and I believe these positive are built in the stock price to some extent. Upside or downside in stock are likely to depend on where industry macros are headed going forward.
CVS Caremark Corporation is a pharmacy healthcare provider in the United States. It has three segments: Pharmacy Services, Retail Pharmacy and Corporate.
My Take: Buy
CVS and other companies in retail pharma industry are expected to benefit from the generic wave which will help their margins and bottom-line. In addition, CVS has also seen some impressive client wins off late. It has recently won $3 bn FEB contract from incumbent Medco (NYSE:MHS). The FEP contract builds on several recent wins ( $11 bn in new contracts over the last two years) and indicate continued turn around in CVS' PBM business. Going forward also CVS is well positioned for future contract wins, including the $500 mn CalPERS contract that is also transitioning away from Medco in 2012. Further, Caremark's restructuring program is also going well and is likely to help stock outperformance.
Citigroup Inc is a global diversified financial services holding company. Citigroup businesses provide consumers, corporations, governments and institutions with a range of financial products and services.
My Take: Buy
Citigroup is significantly undervalued financial company from every perspective. It is trading at a discount to its Tangible Book Value and has a forward PE of just 7x. Further, it has a strong emerging market presence and over 60% of its core business coming from foreign markets. Going forward, its earnings are likely to continue benefiting from improving credit trends, partly offset by seasonally lower trading revenues over the next two quarters. Its operating leverage is also expected to improve in the back half of 2011, as a ramp up in investments in Asia and Latin America begin to generate revenue. Attractive valuation, strong capital levels and potential for faster growth from emerging markets makes it a good buy.
For other companies in the Soros' top buy list, below are some of the specifics, including a brief description of their business and growth expectations:
Charter Communications Inc is a provider of cable services in the United States, offering a variety of entertainment, information and communications solutions to residential and commercial customers. The company's infrastructure consists of a hybrid of fiber and coaxial cable plant passing approximately 11.8 million homes, with 98% of homes passed at 550 megahertz (MHz) and 97% of plant miles two-way active. Charter's EPS forecast for the current year is -$0.21 and next year is $2.10. According to consensus estimates, its top line is expected to grow 2.80% in the current year and 4.50% next year.
Itaú Unibanco Holding SA is a bank in Brazil. The company's principal categories of operations are banking, which includes commercial bank through Itaú Unibanco and corporate and investment banking through Banco Itaú BBA SA. ITUB's EPS forecast for the current year is $2.05 and next year is $2.30. According to consensus estimates, its top line is expected to grow 16.70% in the current year and 9.10% next year.
HCA Holdings Inc is a non-governmental hospital operator in the United States and an integrated provider of health care and related services. The company provides services through a network of acute care hospitals, outpatient facilities, clinics and other patient care delivery settings. HCA's EPS forecast for the current year is $2.78 and next year is $3.02. According to consensus estimates, its top line is expected to grow 5.30% in the next year.
Wabash National Corporation is engaged in designing, manufacturing and marketing standard and customized truck trailers and related transportation equipment. The company is a producer of standardized sheet and post and refrigerated trailer products. Through its Transcraft subsidiary, it also manufactures steel flatbed and dropdeck trailers. Wabash's EPS forecast for the current year is $0.44 and next year is $1.02. According to consensus estimates, its top line is expected to grow 76.60% in the current year and 28.30% next year.
Baidu Inc is a Chinese-language internet search provider. The company conducts its operations in China principally through Baidu Online Network Technology (Beijing) Co., Ltd., its wholly owned subsidiary in Beijing, China. Baidu's EPS forecast for the current year is $2.64 and next year is $3.97. According to consensus estimates, its top line is expected to grow 66.90% in the current year and 51.30% next year.
BE Aerospace Inc is a manufacturer of cabin interior products for commercial aircraft and business jets and distributor of aerospace fasteners and consumables. The company sells its products directly to all of the world's major airlines and aerospace manufacturers. BE Aerospace's EPS forecast for the current year is $2.08 and next year is $2.58. According to consensus estimates, its top line is expected to grow 24.80% in the current year and 11.60% next year.
Noble Energy Inc is an independent energy company, which is engaged in the oil and gas exploration and production worldwide. The company has operations in four main areas: the Central DJ Basin onshore United States; the deepwater Gulf of Mexico; offshore West Africa, and offshore Eastern Mediterranean. Noble's EPS forecast for the current year is $4.96 and next year is $6.72. According to consensus estimates, its top line is expected to grow 20.40% in the current year and 22.70% next year.
Ferro Corporation is a producer of specialty materials and chemicals, which are sold to a range of manufacturers who, in turn, make products for end-use markets. The company operates in six segments: Performance Coatings, Electronic Materials, Color and Glass Performance Materials, Polymer Additives, Specialty Plastics, and Pharmaceuticals. Ferro's EPS forecast for the current year is $1.30 and next year is $1.54. According to consensus estimates, its top line is expected to grow 11.00% in the current year and 5.40% next year.
Danaher Corporation designs, manufactures and markets professional, medical, industrial and commercial products and services. The company operates in five segments: Test & Measurement; Environmental; Life Sciences & Diagnostics; Dental, and Industrial Technologies. Danaher's EPS forecast for the current year is $2.77 and next year is $3.13. According to consensus estimates, its top line is expected to grow 9.80% in the current year and 8.90% next year.
Express Scripts Inc is a pharmacy benefit management operating in North America, offering a range of services to its clients, which include health maintenance organizations (HMOs), health insurers, third-party administrators, employers, union-sponsored benefit plans, workers' compensation plans and Government health programs. Express' EPS forecast for the current year is $3.20 and next year is $3.93. According to consensus estimates, its top line is expected to grow 1.70% in the current year and 3.40% next year.
Polo Ralph Lauren Corporation is engaged in the design, marketing and distribution of products, including men's, women's and children's apparel, accessories, fragrances and home furnishings. The company operates in three segments: Wholesale, Retail and Licensing. Polo's EPS forecast for the current year is $6.31 and next year is $7.30. According to consensus estimates, its top line is expected to grow 15.50% in the current year and 8.30% next year.
Gilead Sciences Inc is a biopharmaceutical company. The company focuses on the development and commercialization of human therapeutics for life threatening diseases. The company's products include Truvada, Atripla, Viread, Emtriva, Hepsera, AmBisome, Letairis, Ranexa, Vistide and Cayston. Gilead's EPS forecast for the current year is $3.96 and next year is $4.93. According to consensus estimates, its top line is expected to grow 4.10% in the current year and 8.50% next year.
NII Holdings Inc provides wireless communication services under the Nextel brand through operating companies located in selected Latin American markets, with its principal operations located in Mexico, Brazil, Argentina, Peru and Chile. NII's EPS forecast for the current year is $2.56 and next year is $2.94. According to consensus estimates, its top line is expected to grow 22.60% in the current year and 13.40% next year.
Amazon.com Inc is an online retailer. The company operates in two segments: North America and International. Amazon's EPS forecast for the current year is $2.47 and next year is $3.80. According to consensus estimates, its top line is expected to grow 37.00% in the current year and 28.90% next year.
MicroStrategy Incorporated is a worldwide provider of business intelligence software that enables companies to report, analyze and monitor the data stored across their enterprise. MicroStrategy provides analytical performance to business users through e-mail, Web and mobile devices. The company's customers operate in the retail, telecommunications, financial services, insurance, pharmaceutical and healthcare, manufacturing and technology/internet sectors. MicroStrategy's EPS forecast for the current year is $2.88 and next year is $4.60. According to consensus estimates, its top line is expected to grow 19.10% in the current year and 13.10% next year.
Disclosure: I have no positions in any stocks mentioned, and no plans to initiate any positions within the next 72 hours.