Analyzing George Soros's 5 Top Sells

Includes: AMZN, BA, HPQ, MDCO, WDC
by: Rash Menaria

Soros Fund Management LLC is one of the most successful and high-profile funds, managed by billionaire hedge fund manager George Soros, who 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.

I discussed George Soros' Top Buys in a previous article. In addition, it is interesting to look at top stocks in which Soros Fund Management is selling its holdings and booking profits. The following is a list of some of the top sells of Soros Fund Management's from the last quarter.

Company Name


Share Sold Last Quarter

Hewlett-Packard Company


377,616, Inc.



The Medicines Company



The Boeing Company



SanDisk Corporation



Source: 13F filing

I am bearish on Hewlett-Packard (HPQ) and Amazon (AMZN) among above stocks.

Hewlett Packard is an American multinational that provides products, technologies, software solutions and services to individual consumers and businesses. Its products include PCs, workstations, printers and scanning devices. In addition, it provides consulting, outsourcing and technology services, along with enterprise servers and information management solutions.

Revenue slowdown in the U.S. and macro concerns in Europe are hurting Hewlett Packard's printer business. In addition, PCs and servers are also expected to be areas of weakness for HPQ, as indicated by a difficult demand environment during December. Further, investments in R&D and S&M, and high interest expenses are likely to weigh on its earnings.

Hewlett Packard missed consensus expectations last quarter. Although the newly appointed CEO Meg Whitman is trying to turn around the company's business, there have been no positive signs as yet. Till such time as I see definitive signs of a turnaround in Hewlett Packard's business, it will be difficult for me to be positive on the company.

With a high exposure to the eurozone, secular declines in printers and PCs, and foreign exchange pressures, I believe that HP's stock price could see a further decline going forward.

I would also like to avoid Amazon. I find Amazon's stock pricey. I understand the growth potential and current investment mode of Amazon (which is keeping earnings depressed), but the current price seems to be already pricing in a lot of positives. Also, I don't agree that growth in international markets will come easy for Amazon without any significant competition from local players.

I am neutral on The Medicines Company (MDCO). The Medicines Company is a global pharmaceutical company focused on advancing the treatment of critical care patients through the delivery of medicines to the global hospital marketplace. It has two marketed products: Angiomax (bivalirudin) and Cleviprex (clevidipine butyrate) injectable emulsion, and a range of care hospital products in development, including two late-stage development product candidates, cangrelor and oritavancin. The company is trading at a forward PE of 17x, and I believe it is already pricing in Angiomax sales into mid-2019. Any material upside thus lies in pipeline progress. However, key Phase3 data for Cangrelor and oritavancin are not expected until 2013. Hence, I don't see much upside for the stock in the near term.

Two stocks where I don't agree with George Soros and believe they are Buys instead of Sells are Boeing and Sandisk.

Boeing Co. (BA) is the world's leading aerospace company and the largest manufacturer of commercial jetliners and military aircraft combined. It operates in the following segments: Commercial Airplanes, Boeing Defense, Space & Security and Boeing Capital Corporation, which provides financial solutions facilitating sale and delivery of Boeing commercial and military aircraft, satellites, and launch vehicles.

Last month, BA reported impressive Q4 results with EPS of $1.32, comfortably beating the consensus estimates of $1.01. This performance was driven by strong sales in its Commercial segment and better margins from the Defense business. The balance sheet looks stable, with debt remaining flat and free cash flow at $2.3 billion looks strong.

Looking forward, I believe Boeing has considerable upside potential due to strong volume growth visibility based on commercial airplane backlogs and production rates. Management spoke of continued strong demand for commercial aircraft. Healthy order tally along with strong cash flows are expected to drive up share prices in 2012.

SanDisk Corporation (SNDK) is engaged in designing, developing and manufacturing data storage solutions in a range of form factors using the flash memory, controller and firmware technologies. The Company's products are used in a range of consumer electronics devices, such as mobile phones, tablets, eReaders, global positioning system devices, gaming systems, imaging devices and computing platforms.

In the near term, SanDisk is likely to benefit from an improved product mix, as solid state drive adoption in PCs is accelerating due to the expected hard disk drive shortage caused by Thai floods. While the Thailand floods have negatively affected DRAM and PC, they were a net positive for the NAND market.

In the medium term, SanDisk's exposure to high growth NAND Flash market and increasing competitive barrier to entry in the NAND market are likely to bode well for SanDisk. Unlike DRAM, NAND is no longer a commodity business. Technical issues create huge variations in performance between solutions and higher performance solutions enabled by advanced controllers command high premiums.

SanDisk is financially strong with ~$2.5bn or $10/share in short term cash and $2.7bn or $11/share in long term investments offset by $1.6bn or $6.50/share in long term debt. Adjusted for cash Sandisk is trading at ~6x FY12 earnings, which is attractive given its leadership position in the industry.

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

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