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 a 32%, 8% and 29% return respectively for investors. The following is a list of some of the top holdings of Soros Fund Management LLC with good yield.
Shares Held- 12/31/2011
Sara Lee Corp.
Kraft Foods Inc.
Clicksoftware Technologies Ltd.
Kraft Foods is my favorite stock in the above list. Kraft manufactures and markets packaged food products, including biscuits, confectionery, beverages, cheese, convenient meals and various packaged grocery products. Kraft is trading at a forward PE of 15x. Its EPS forecast for the current year is 2.28 and next year is 2.52. According to the consensus estimates, Kraft's top line is expected to grow 10.50% in the current year and 2.60% next year.
Trading at a forward PE of 15, Kraft's valuations are in line with its peers despite its above-average growth rate. I believe this will change going forward, as Kraft is planning to split up its high-growth Snacks business and the stable return of Grocery business in FY12. This will highlight the above peer growth profile of the global snacks business and hence, help the company achieve a better valuation.
I will also be keeping an eye on Clicksoftware. The company initiated a dividend last year, and if it is able to maintain its current dividend rate, it might also be an interesting long opportunity.
YPF SA is also an undervalued stock. However, I am not too sure if it will be able to maintain its dividend rate. Argentina's government is pressurizing YPF SA to reinvest its earnings from the last two years in exploration and production instead of paying dividends to shareholders. Despite of the dividend risk, I remain bullish on the stock given the company's strong business fundamentals, and believe it is a value buy.
The company recently announced an upgrade on its unconventional shale oil to 927 million BOE (up from previous 150 million BOE). There is an enormous resource potential for the company from shale oil /gas in Argentina and it is likely going to be a key value driver in the long term. The company's management is focused on full appraisal/development of shale oil assets, with goal of 50tbpd of oil output in 2015-16 and eventual output of 80+ tbpd. This would enable YPF to provide 100% of crude processed in its refineries. The breakeven price for the development of shale oil would be at ~US$60/Bbl. Although the company's shale oil/gas resources will take a few more years to monetize, they can be company transforming and will unlock substantial value for long term investors.
Sara Lee Corp. is another good long candidate from the above list. Sara Lee is a diversified global manufacturer and marketer of consumer products, including: Retail, Bakery and Foodservice in North America, and Beverages, Bakery and Household and Body Care internationally. Although there are some-near term cost headwinds, I am bullish on the stock, primarily due to proposed breakup this year, which will create value for the stockholders.
PepsiCo, Inc. is one stock in the above list of which I am a bit skeptical. Pepsi is a global food, snack and beverage company. Pepsi's slowing growth and market share losses against its key rival Coca Cola (KO) make it a risky stock. Pepsi recently announced some restructuring measures-- like reducing 3% of the global work force; raising advertising and marketing expenses by $500 million to $600 million in 2012 on its iconic brands; and spending $100mn to improve its delivery and display racks.
However, I don't feel this is enough to reverse the trend. When Coca-Cola faced similar problems in the past, it took it around five years of disciplined focus on brand building, innovation and bottler re-investment to improve trends. Clearly, it is not going to be an easy ride for Pepsi either.