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New York-based Soros Fund Management LLC, founded by George Soros in 1969 with legendary investor Jim Rogers, manages over $24 billion, including $6.84 billion in 13-F assets per its latest Q1 filing this week, on Tuesday. A frequent commentator on markets, George Soros 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. The fund holds a moderately diversified portfolio of over 160 positions, including 40%-45% of its holdings in large-caps, 20% in mid-caps and the remaining 35%-40% in small-cap equities.

We analyzed Soros' Q1 13-F to determine its highest conviction bets, selecting the largest buys and sells in size, where the buy/sell is also a significant proportion of its prior quarter position in that company. Based on that analysis, the following are two of its high conviction bullish bets in Q1 2012, both stocks exhibiting strong growth and in a multi-year bullish trend, currently trading near their all-time highs (see Table):

Salesforce.com Inc. (NYSE:CRM): CRM provides customer and collaboration relationship management software and services to various businesses and industries worldwide. Soros added a new $29 million position in Q1. Another leading institution making a large bullish bet on CRM in Q1 included mega fund T Rowe Price Associates, with $288 billion in 13-F assets, adding 1.4 million shares to its 4.1 million share prior quarter position. Also, for those familiar with our series on legendary or guru funds, and the world's largest money managers or mega funds, we noted in earlier articles that both groups were bullish on CRM, based on their Q4 2011 trading activity.

CRM reported its Q4 (January) on Thursday after the market-close, beating revenue and earnings estimates (37c v/s 34c), and guiding FY revenues and earnings in-line. The shares are up about 9% intra-day Friday on the earnings, trading within 10% of its all-time highs, and up over 45% YTD. A number of brokers upgraded the stock following the earnings, with FBR raising the target to $180 from $175 following the earnings, noting that CRM was continuing to outperform its rival enterprise software vendors in an unfavorable climate due to its best-in-class execution.

Wall Street analysts are generally bullish on the stock (31 out of 41 rate it a buy/strong buy), with a mean price target of $164, that is sure to go up based on the strong Q1 report. Its shares currently trade at 71-72 forward P/E and 11.6 P/B compared to averages of 36.8 and 4.1 for its peers in the computer software group, while earnings are projected to rise at a strong 21.9% annual rate from $1.40 in 2012 to $2.08 in 2014.

TripAdvisor Inc. (NASDAQ:TRIP): TRIP is an online travel research company, aggregating reviews and opinions of members about destinations and accommodations such as hotels, resorts, restaurants, vacation packages and travel guides. Soros added a $7 million in Q1 to its $15 million prior quarter position. Other leading institutions with large bullish bets on TRIP in Q1 include hedge fund guru Andreas Halvorsen's Viking Global Investors adding a new 10.4 million share position, and mega fund Wellington Management, with $254 billion in 13-F assets, adding a (almost) new 7.0 million share position.

TRIP was spun-off from online travel services company Expedia in December of last year, when Expedia split into two companies, with the baseline online travel services business remaining under the Expedia name, and the TripAdvisor being spun-off as the only publicly traded, pure-play travel advertising services company. The baseline Expedia business was growing in single-digits, while TripAdvisor growth rates have been above 30% and are expected to continue being high for the foreseeable future.

TRIP reported its Q1 (March) on May 1st, beating analyst revenue and earnings estimates (38c v/s 34c), with strength in both search advertising revenue and subscription/other revenue. The stock is up about 65% YTD, and trades within 10% of its all-time highs, at an attractive 22-23 forward P/E compared to the average of 26.1 for its peers in the internet content group, while earnings are projected to continue rising at a strong 16.9% annual rate from $1.34 in 2011 to $1.83 in 2013.

We wrote about TRIP in February, shortly after it reported a disappointing Q4 that took it down into the mid-$20s, opining that investors may want to look at the pullback as an opportunity to load up on this high-growth name at discount prices before growth and prices ramp up again. TRIP prices have since appreciated about 50% in the last three months since that time.

The following are additional stocks that Soros is bullish about, accumulating shares in them in Q1 2012 (see Table):

  • Sara Lee Corp. (SLE), that is a manufacturer of meats, coffee, teas, household products and baked goods for consumers worldwide, in which it added $135 million in Q1 to its $19 million prior quarter position;
  • Macy's Inc. (NYSE:M), that operates 850 department stores in 45 states, D.C., Puerto Rico and Guam, in which it added a new $52 million position in Q1;
  • Elan Plc Adr (NYSE:ELN), an Ireland-based worldwide specialty pharmaceutical company focused on the discovery, development and marketing of therapeutic products and services in neurology, acute care and pain management and on the development and commercialization of products using its extensive range of proprietary drug delivery technologies, in which it added $46 million in Q1 to its $5 million prior quarter position;
  • Tesoro Corp. (NYSE:TSO), engaged in the refining and marketing of petroleum products in the mid-continental and western U.S., in which it added a new $28 million position in Q1;
  • Hollyfrontier Corp. (NYSE:HFC), an independent petroleum refiner and marketer in the U.S., that is engaged in the production of high value light petroleum products such as gasoline, diesel fuel, jet fuel, and other specialty products, in which it added a new $21 million position in Q1;
  • Marathon Petroleum (NYSE:MPC), engaged in the refining, transporting and marketing of petroleum products, and operating six refineries in the Gulf Coast and Midwest regions that refine crude oil and other feed-stocks, and distributing the refined products through barges, terminals and trucks, in which it added a new $20 million position in Q1; and
  • Transocean Ltd. (NYSE:RIG), that provides offshore contract drilling for oil and gas wells worldwide, in which it added a new $20 million position in Q1.

The following are Soros' bearish picks, based on its Q1 selling activity (see Table):

  • Google Inc. (NASDAQ:GOOG), the Internet's premier search engine company, in which it cut out completely its $162 million prior quarter position;
  • Apple Inc. (NASDAQ:AAPL), probably among the most innovative companies the world has ever known, and one of the world's largest manufacturers of personal computers, mobile communication devices, and portable digital music players, in which it cut $30 million in Q1 from its $50 million prior quarter position;
  • Texas Instruments (NASDAQ:TXN), a global manufacturer of analog ICs and digital signal processors used in cell phones, navigation systems and PCs, in which it cut $13 million in Q1 from its $17 million prior quarter position;
  • Freeport McMoRan Copper & Gold (NYSE:FCX), that is engaged in the exploration and development of copper, gold, silver and molybdenum mines in Indonesia, North and South America, in which it cut out completely its $12 million prior quarter position; and
  • Baidu Inc. (NASDAQ:BIDU), often touted as the Google of China, a leading Chinese provider of internet search, targeted online advertising and other internet content services, in which it cut $10 million in Q1 from its $14 million prior quarter position.

Table


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Credit: Fundamental data in this article and company descriptions are based on SEC filings, Zacks Investment Research, Yahoo, Thomson Reuters and Briefing.com. The information and data is believed to be accurate, but no guarantees or representations are made.

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 our 'opinions' and we may be wrong. We 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 our 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.

Source: Billionaire Soros' Q1 High Conviction Buys In 2 Growth Stocks, Other Buys And Sells