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Summary: George Soros, legendary American Investor and head of the Quantum Fund, has achieved outstanding returns in his Global Macro Fund. Based on sector moves in his latest 13-F filings, he is bullish on the consumer, finance, services, healthcare and technology Sectors. He is bearish on energy, transportation and basic materials, including gold.

New York-based Soros Fund Management LLC, founded by George Soros in 1969 with legendary investor Jim Rogers manages $28 billion, including $5.2 billion in equity investments. Other investment legends that have worked at the fund in the past have included Victor Niederhoffer and Stanley Druckenmiller. A frequent commentator on markets, he is probably most known by his political causes and as the person who broke the Bank of England in 1992, netting himself a $1 billion profit in the process by correctly predicting that the British government would have to devalue the pound sterling. He is ranked as the 35th richest person in the world, with a net worth estimated by Forbes at $14.2 billion. An avid philanthropist, he has given away $7 billion to various causes since 1979. Two of his sons, Robert and Jonathan, are actively involved in management of the Quantum Fund.
The Quantum Fund returned 30.5% compounded return or 400,000% cumulative between 1969 and 2000, well above the 12.2% return or 3,500% cumulative return of the S&P 500. It is a Global Macro Fund, meaning that it makes broad bets in asset classes and sectors around the world, based on its geopolitical view and using economic theory to make its decisions. It is important to recognize that the fund managers are not stock-pickers, and they do not base their decisions on valuation fundamentals. As such, it is more relevant to look at the sector bets of the fund-- in terms of the flow of money in and out of sectors-- than to look at specific equity investments.
The fund holds a diversified portfolio of 1,001 positions, including 45% of its holdings in large-caps, 35% in mid-caps and the remaining 20% in small-cap equities. Its portfolio turnover is 100%, implying an average holding period of one year. Based on the most recent SEC 13-F filing for the March 2011 quarter, we determined that its portfolio is over-weight in the consumer and basic materials, and it is under-weight the energy, industrial and utility sectors.
The following summarizes its sector views based on the latest reported 13-F filing for the March 2011 quarter, and updated based on any 13-G filings since the end of the quarter:
  • Bullish on finance sector: The fund added $180 million to its $360 million position from the prior quarter by adding $93 million to its $15 million position in Wells Fargo & Co. (WFC) and another $83 million in Citigroup Inc. (C).
  • Bullish on services sector: The fund added $250 million to its $720 million position from the prior quarter by adding $91 million in drug store company CVS Caremark Corp. (CVS), $47 million in online retailer Amazon.com (AMZN), and $48 million in NII Holdings Inc. (NIHD), a provider of digital and analog wireless voice and data services in Mexico, Brazil, Argentina, Peru and Chile. It also sold out of a $60 million position in consumer electronics retailer Best Buy Co. (BBY) and a $49 million position in discount retail chain Wal-Mart Stores (WMT).
  • Bullish on technology sector: The fund added $300 million to its $770 million position from the prior quarter by adding $172 million in Motorola Solution Inc. (MSI), a manufacturer of two-way radios, wireless network security products, and voice and data communications systems; adding $80 million in Danaher Corp. (DHR), a manufacturer of water treatment and vapor recovery systems, fuel dispensers, digital imaging systems and test products; and adding $62 million in Microstrategy Inc. (MSTR), a developer of enterprise data analysis and tracking applications for various industries, including retail and telecom. The $62 million addition in MSTR includes $20 million added since the end of the quarter, as noted in a SEC-13G filing by the fund on May 20th.
  • Bullish on consumer non-cyclical sector: The fund added $250 million to its $96 million position from the prior quarter, including taking a large new position in Adecoagro SA (AGRO), a Luxembourg-based provider of farming crops, agricultural products, cattle, dairy, sugar, ethanol and energy production. Furthermore, it sold $63 million of its position in Coca Cola Enterprises Inc. (CCE).
  • Bullish on consumer cyclical sector: The fund added $210 million to its $215 million from the prior quarter, including adding $133 million in Visteon Corporation (VC), a manufacturer of climate control systems, cockpit modules and chassis products to automotive OEMs, and $61 million in Polo Ralph Lauren Corp. (RL), a marketer of premium lifestyle apparel, accessories, fragrances and home products.
  • Bullish on healthcare sector: The fund added $210 million to its $500 million position from the prior quarter by adding $64 million in pharmacy benefit management services company Express Scripts Inc. (ESRX), $52 million in drug developer Gilead Sciences Inc. (GILD), and $42 million in dialysis services provides Davita Inc. (DVA).
  • Bearish on energy sector: The fund sold $135 million of its $570 million position from the quarter, including selling out of its $171 million position in U.S. oil and gas exploration and production company Plains Exploration and Production (PXP).
  • Bearish on transportation sector: The fund sold $111 million of its $205 million position from the prior quarter, including almost selling out completely out of its $144 million position in Delta Airlines Inc. (DAL) from the prior quarter.
  • Bearish on basic materials sector and gold: The fund sold $890 million of its $1.8 billion position from the prior quarter, most of it from selling long positions in Gold. This included selling $653 million position in SPDR Gold Trust (GLD), an investment trust seeking performance corresponding to the price of gold bullion, $70 million position in iShares Gold Trust (IAU), an ETF seeking performance based on day-of-day movement of the price of gold bullion. It also sold $122 million and $41 million in Canadian mining companies Novagold Resources (NG) and Kinross Gold Corp. (KGC) respectively. Furthermore, it sold a $46 million position in Monsanto Co. (MON), a manufacturer of corn and other crop seeds and crop protection products for growers worldwide.
Table
Company
Ticker
Action
Market Value at end of March 2011 Quarter
Change in Value from Prior Quarter
Percent of Portfolio
Percent Shares Owned
SPDR Gold Trust
GLD
Cut
$ 7 million
($653) million
0.13%
0.01%
Adecoagro SA
AGRO
New
$ 366 million
$366 million
6.79%
23.46%
Motorola Solutions Inc.
MSI
Add
$ 200 million
$172 million
3.71%
1.32%
Plains Exploration & Production Co.
PXP
Drop
$ 0 million
($171) million
0.00%
0.00%
Visteon Corp.
VC
New
$ 133 million
$133 million
2.47%
4.18%
Delta Air Lines Inc.
DAL
Cut
$ 17 million
($127) million
0.32%
0.21%
Novagold Resources Inc.
NG
Cut
$ 45 million
($122) million
0.84%
1.49%
Wells Fargo & Co.
WFC
Add
$ 111 million
$93 million
2.06%
0.07%
CVS Caremark Corp.
CVS
Add
$ 100 million
$91 million
1.86%
0.22%
Citigroup Inc.
C
Add
$ 130 million
$83 million
2.41%
0.10%
Danaher Corp.
DHR
Add
$ 97 million
$80 million
1.80%
0.28%
iShares Gold Trust
IAU
Drop
$ 0 million
($70) million
0.00%
0.00%
Express Scripts Inc.
ESRX
Add
$ 73 million
$64 million
1.36%
0.25%
Coca Cola Enterprises Inc.
CCE
Cut
$ 1 million
($63) million
0.03%
0.02%
Polo Ralph Lauren Corp.
RL
Add
$ 61 million
$61 million
1.14%
0.76%
Best Buy Inc.
BBY
Drop
$ 0 million
($60) million
0.00%
0.00%
Gilead Sciences Inc.
GILD
Add
$ 58 million
$52 million
1.08%
0.17%
Wal-mart Stores Inc.
WMT
Drop
$ 0 million
($49) million
0.00%
0.00%
NII Holdings Inc.
NIHD
Add
$ 51 million
$48 million
0.94%
0.71%
Amazon.com Inc.
AMZN
Add
$ 53 million
$47 million
0.98%
0.06%
Monsanto Co.
MON
Cut
$ 192 million
($46) million
3.56%
0.50%
Microstrategy Inc.
MSTR
Add
$ 46 million
$42 million
0.84%
4.22%
Davita Inc.
DVA
Add
$ 43 million
$42 million
0.81%
0.53%
Kinross Gold Corp.
KGC
Cut
$ 22 million
($41) million
0.40%
0.12%
Disclaimer: Material presented here is for informational purposes only. Nothing in this article should be taken as a solicitation to purchase or sell securities. Before buying or selling any stock you should do your own research and reach your own conclusion. Further, these are my ‘opinions’ and I may be wrong. I may have positions in securities mentioned in this article. You should take this into consideration before acting on any advice given in this article. If this makes you uncomfortable, then do not listen to my thoughts and opinions. The contents of this article do not take into consideration your individual investment objectives so consult with your own financial adviser before making an investment decision. Investing includes certain risks including loss of principal.



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

Source: Top Sector-Based Themes From Soros' Global Macro Fund