Following is a list of top ten holdings by George Soros’ Hedge Fund (Soros Fund Management):
Click here for Part 2 containing analysis of Visteon (NYSE:VC), Citigroup (NYSE:C), Westport Innovations (NASDAQ:WPRT), Emdeon (NYSE:EM) and Wells Fargo (NYSE:WFC).
Company Name | Ticker | No. of shares held |
Adecoagro SA | 2,71,58,693 | |
Interoil Corp | 40,47,322 | |
Motorola Solutions Inc | 44,80,610 | |
Monsanto Co | 26,58,998 | |
Dendreon Corp | 46,71,699 | |
Visteon Corp | 21,34,106 | |
Citigroup Inc | 29,38,503 | |
Westport Innovations Inc | 55,47,604 | |
Emdeon Inc-Class A | 71,52,018 | |
Wells Fargo & Co | 35,05,100 |
Here is my brief analysis and take on George Soros’s top holdings:
Adecoagro (NYSE:AGRO), founded in 2002 and based in Luxembourg, operates as an agricultural company in South America. Its main activities include the production of grains, rice, oilseed, dairy products, sugar, ethanol, coffee and cotton. As of December 31, 2010, it owned a total of 282,798 hectares, consisted of 21 farms in Argentina, 15 farms in Brazil, and one farm in Uruguay, as well as had a cogeneration capacity of 112 MW of electricity.
Recommendation: Buy
Adeco’s 1Q11 gross sales at $58.3mn were 11.3% higher on a year-over-year (y-o-y) basis; 84% of same being derived from the Farming business and 26% from the Sugar and Ethanol business. Strong performance is expected due to firming commodity prices in the market, increase in yields in rice, sunflower and wheat and expansion in the planted areas of rice. Adeco also has a significant amount of land that is undeveloped, implying potential for growth without buying any new land. It also has a proven record in land transformation and land rotation. According to consensus estimates, Adeco shares have a price target of $15.92.
The company does face a concern from restriction on foreign land ownership in Argentina, though a solution is expected that would not impost complete restrictions on foreign ownership. Also, given the diversified portfolio of the company this concern is expected to have a lesser impact on the company versus its competitors.
InterOil Corporation (NYSE:IOC), based in Australia, is an oil and gas company with operations in Papua New Guinea. It is a fully integrated energy company operating in the following four segments: Upstream, Refining, Liquefied Natural Gas and Downstream.
Recommendation: Hold
The Final Investment Decision (FID) on InterOil’s integrated resource development target is expected to be reached by end of the year. However, given the past delays on same, any further delay is expected to adversely impact the company’s stock price. It is also expected that offtake announcements will be made by year end regarding a portion of the Elk/Antelope resource. While some buyers want only offtake, others want both offtake and an ownership of a portion of the resource. With no new deals expected till FID is in place, we are recommending a hold strategy for the stock for now till there is higher clarity on its future roadmap. According to consensus estimates, EPS is expected to be $.43 for current year and $.56 for Dec12.
Motorola Solutions Inc (NYSE:MSI), with its headquarters in Illinois, changed its name from Motorola to Motorola Solutions on January 4, 2011, after administering a 1 for 7 reverse stock split and spinning off its Home and Mobile Devices segments into Motorola Mobility (NYSE:MMI).
Recommendation: Buy
Following the spinoff, MSI operates in two segments: Public Safety & Government (65% of revenue); and Enterprise (35% of revenue). MSI has a leading position in the Public Safety & Government segment with limited competitors. In addition, according to Harris Corporation, this market is growing at 3% annually. The company provides deep levels of customization for its Public safety and Enterprise customers, a key feature that enables it to deepen its customer relationships. The deployment of LT (Long -term Evolution) for public safety applications, though taking longer than expected, once deployed presents a $4-$5 bn opportunity for Motorola and other suppliers over four-five years. An increase in public safety budgets in North America and further opportunities for cost cutting are favourable tailwinds for MSI. The early rollout of digital radio systems would provide MSI with an opportunity for slow but steady and a highly profitable growth.
Monsanto (NYSE:MON), is a leading provider of agricultural products with $10.5 bn in revenue in FY10. The company makes RoundUp, the world’s best selling herbicide, and other crop protection products. Monsanto also produces seeds and provides biotech traits for insect protection and herbicide tolerance.
Recommendation: Buy
Monsanto is finally looking at making a comeback from the lows it has seen over the past few years. Its strategy of sharing approx. 2/3 of the value of high technology seeds with the growers has helped it build its credibility further with the farmers and reverse the competition gains. For 3Q11, Monsanto has gained share in cotton, corn and soy. Its Double Pro and Triple Pro have been sold out. Though SmartStax’s sales have been lower than company expectations, once it starts selling completely in RIB format in FY12, it is expected to take off significantly, also offering Monsanto pricing premium potential on the product.
For FY11, COGS savings from last year's absence of aggressiveness in production plans are showing through. Approval for the soybean double stack in Brazil, and the corn triple PRO in Argentina, have come in earlier than expected. The company is driving adoption and penetration of its reduced-refuge corn seed products and RR2 soybeans, which should enable it to achieve gains in 2012. Higher seed prices are also expected in 2012, driven by new genetics, increased trait penetration and the pass thru of corn and soybean seed production cost inflation. According to consensus estimates, EPS is expected to be $2.86 for current year and $3.39 for FY12.
Dendreon (NASDAQ:DNDN), with headquarters in Seattle, is a bio technology company focused on novel therapies for cancer. The company applies its expertise in antigen identification, engineering and cell processing to produce active cellular immunotherapy product candidates designed to stimulate an immune response. Its primary value driver is Provenge, the first antilogous cellular immunotherapy to receive FDA approval. The company is in the process of obtaining additional regulatory approvals in Europe and around the world.
Recommendation: Buy
FDA approval of Dendreon’s manufacturing facility in Los Angeles, marks another step toward expansion of the company’s Provenge manufacturing capacity. The facility in Atlanta, is scheduled to gain its FDA approval this August. In addition, CMS issued a positive final National Coverage Determination specifying full coverage under Medicare for Provenge in its labeled indication. Concurrence issuance of a Q code for Provenge should also promote adoption by enabling electronic reimbursement requests. These two actions combined, lift an overhang on reimbursement and approval of production facilities and clear the path for a focus on sales acceleration. Provenge is expected to have a potential $4bn+ in sales. According to consensus estimates, the mean price target for the share is $49.95.
Disclosure: I have no positions in any stocks mentioned, and no plans to initiate any positions within the next 72 hours.
Disclosure: I have no positions in any stocks mentioned, and no plans to initiate any positions within the next 72 hours.