By Justin Cahoon
We took a look at billionaire George Soros' fund holdings to find stocks that you could buy for cheaper than he paid. Here are 8 names that we found. As always, use the list below as a starting point for your own due diligence.
Visteon Corp. (NYSE:VC) supplies electronics, i.e. climate, interiors, modules and components, to automotive manufacturers in the motor vehicle parts and accessories industry. Soros paid an average of $69.72 per share. The market price at the end of July 29, 2011 was $62.70, down about 8% from what Mr. Soros paid. George Soros currently owns 2,134,106 shares.
Visteon has a market cap of 3.26B and a P/E ratio of 7.04. Compared to similar market cap competitors, including Denso Corp. (OTCPK:DNZOY), Visteon has a low P/E ratio, indicating that shares are distressed. But new management - Kevin Dowd and Harry Wilson - was elected to the board of directors, and I expect Visteon’s P/E to expand in the latter half of the year. The stock is undervalued and a likely increase in P/E makes Visteon a compelling buy at the current market price.
Wells Fargo & Co. (NYSE:WFC) is a financial and bank holding company that has recently been compared to its peers as one of the more sound investments in the banking industry, though this is not saying much with recent stock price falls. George Soros bought this company at the average price of $32.23 and Wells Fargo has seen a 12% decline since then to the current market price of $27.94, nearly a 1% fall from just Thursday.
There continues to be trouble lurking in the banking industry but a strong balance sheets suggests the outlook for Wells Fargo looks to be bullish in the long term. There is also Warren Buffett's Berkshire Hathaway (BRK.A, BRK.B) that owns three-hundred million shares. Recent analyst’s opinion suggest buying Wells Fargo. In the next few months, going long Wells Fargo could pay off as the market fulfills the bull prophecy. I would suggest taking advantage of the low price for Wells Fargo and going long. WFC is a Wall Street all-star that we think could make you money.
Citigroup Inc. (NYSE:C) offers a broad range of financial products and services to consumers, corporations, governments and institutions. George Soros paid an average of $47.29. The closing price on July 29, 2011 was $38.34, a decline of 19% since Mr. Soros went long.
Citigroup has a P/E of 12.54, higher than that of Wells Fargo, and a market cap of 111.98B. The current market price is undervalued. Much like Wells Fargo, a variety of hedge funds are heavily invested in Citigroup. You can find C in George Soros' portfolio. The current market price is low and I expect these banks to have a substantial increase in the latter half of 2011. Citigroup’s P/E is appealing and suggests to investors to take a long position in the company over competitors.
Express Scripts Inc. (NASDAQ:ESRX) is a pharmacy benefit management company. The company has the third largest market cap in the industry behind CVS Caremark Corporation (NYSE:CVS) and Walgreen Co. (WAG). George Soros bought 1,318,700 shares at an average of $55.84. The closing market price on July 29, 2011 was $54.26, a 3% decrease.
Express Scripts has a P/E of 22.23 and a market cap of 26.49B. Compared to competitors, Express Scripts is doing very well. Walgreen Co. has a higher market cap of 35.35B but a P/E ratio of 15.36, which is slightly higher than CVS Caremark Corporation’s (CVS) P/E of 14.77 which has a higher market cap of 49.22B. I would look to diversify my portfolio with a pharmaceutical giant and Express Scripts is the most appealing. The current market price is undervalued and I expect higher earnings growth in the near future compared to leading competitors.
Weatherford International, Ltd. (NYSE:WFT) provides equipment and services for drilling, evaluation, completion, production and intervention of oil and natural gas wells. George Soros acquired 3,498,700 shares at an average price of $22.66. The closing price on July 29, 2011 was $21.92, a loss of 3%. Weatherford has had strong revenue growth since 2008. The company is competing against Schlumberger Limited (NYSE:SLB) and Halliburton Company (NYSE:HAL) and has successfully captured a large market share, though it struggles in certain markets due to a lack of experience.
The company expects higher earnings growth in the future compared to the Schlumberger and Halliburton. S&P recently changed its hold position to a buy with a 12-month target price of $28.00. I look forward to watching Weatherford performing well the second half of 2011 and giving a solid return to investors. The current market price is undervalued and I suggest taking a long position on Weatherford. We found T. Boone Pickens recently buying WFT.
Petroleo Brasileiro S.A. (NYSE:PBR) is an oil and gas company engaged in all steps in the oil industry, from exploration to distribution. The closing price on July 28, 2011 was $33.88, but slightly up Friday and still down 12% from George Soros’ entry average price of $38.28. Mr. Soros owned over a million shares of Petrobras and for good reason. Petrobras is taking advantage of Brazil’s bright future in the oil industry. In early June, 2010 Brazil approved Petrobras’ request to explore and develop up to 5 billion BOE in offshore areas.
Petrobras has a mega-cap of 221.56B and a P/E of 7.56. Though compared to competitors, its P/E is low, I expect the P/E to rise by the end of 2011 and following years. Petrobas expects to match Exxon Mobil Corporation’s (NYSE:XOM) oil production by 2016. The stock price has languished and lagged, but I would suggest going long at current market price for a long-term trade and take advantage of Petrobras' future growth opportunities and investment return.
Power One Inc. (NASDAQ:PWER) is in the electronics components industry and electrical equipment sector. Power One designs and manufactures inverters, power supplies, converters, and network power systems. George Soros paid an average of $9.47 and since then the stock has depreciated 27% to Friday’s closing price of $7.21.
PowerOne had a strong quarter with revenue up above expectations. P/E ratio for the company was up to 6.48. Emerson Electric Company (NYSE:EMR), which has a market cap of 36.9B, compared to PowerOne’s less than 1B market cap has a P/E ratio of 15.79. At first glace, this company does not look like anything special but I would argue an effective management puts them ahead of competitors. PowerOne has a strong ROA of 26.17% and an ROE of 69.90%, putting them ahead of Emerson and other large market cap companies in the electronics components industry. The stock is undervalued and future growth is promising as well as an effective management team that will put PowerOne above the competition. I would recommend going long at current market price. Last quarter, we highlighted PWER as one stock that could make moves in the second quarter.
Adecoagro S.A. (NYSE:AGRO) is a South American agricultural conglomerate involved in a wide range of agricultural businesses. George Soros paid an average of $12.73 per share. The market price at the end of July 29, 2011 was $11.35. The current price reflects an 11% decrease since George Soros purchased 27,158,693 shares, an investment of about $350 million, at the end of March 2011.
I had a hard time finding any reason to invest in Adecoagro. The company has negative return on assets and equity ratios. Compared to competitors, it has a fairly large market share at 1.3B but companies like Tyson Foods, Inc. (NYSE:TSN) and Nutreco N.V. (NYSE:NUO) have more effective management teams. I would recommend staying away or going short Adecoagro and would not be surprised if the low in the middle of May of $10.09 is retested.
Disclosure: I have no positions in any stocks mentioned, and no plans to initiate any positions within the next 72 hours.