George Soros is the Hungarian-American business magnate known for being "the man who broke the Bank of England" in a single trade in 1992. Soros' Quantum Fund is famous for its annual returns of 30% that spanned 3 decades up to 2000. Soros is a macro manager with a truly global portfolio. From 1973 to 2010, the Soros Fund Management was reported to have made $32 billion in profits. As of 2011, Soros is reported to have net worth of $14.5 billion. The billionaire is also known for his being a philanthropist and an activist.
The Soros Fund Management sold all its holdings in over a hundred stocks this second quarter based on data from Whalewisdom.com. Interestingly, Soros bought more gold and let go of a huge number of financial stocks including JPMorgan Chase (JPM), Capital One (COF), and Wells Fargo (WFC) among others. Soros also let go of his shares in oil companies like Interoil and Chevron. Let us look at these stocks which used to form a relatively large portion of Soros' portfolio in the past.
Previous % of Portfolio
Sara Lee (now Hillshire Brands)
Arris Group Inc.
Source: finviz.com as of Sept. 7, 2012; Yahoo! Finance
Sara Lee Corp. (HSH)
In the second quarter, the Soros Fund Management sold all 7.395 million SLE shares, or 2.34% of its portfolio. It is noted that Soros also sold all of his holdings in the company during the same quarter last year. Soros bought a huge portion of Sara Lee in the first quarter of 2012, about 6.5 million shares, in anticipation of a significant spin off in the second quarter. Back then, Sara Lee supported a decent dividend yield of 2.17%.
At the end of June 2012, Sara Lee, the food and beverage company, split into two companies. The US-based meat business has been named Hillshire Brands while the European counterpart is now called D.E. Master Blenders 1753. Sara Lee was reported to be under-performing in terms of profitability due to its inefficient supply-chain management.
Now the Hillshire Brands Company focuses on its packaged meat business. The stock started trading on the NYSE in the end of June. It currently sells at $26.63, up by 0.20 (0.76%) as of Sept. 7, 2012. The industry in general has performed quite well in the day. Its current dividend yield is 1.88% with a net profit margin of 1.03%. Its performance within the month has improved by 5.88%; its year to date feat is up 3.38%.
CVR Energy (CVI)
In the second quarter, Soros sold all the 3.7 million CVI shares it bought in the first quarter this year. This holding used to form 1.47% of the hedge fund management's portfolio. CVR Energy is just one of the energy companies Soros let loose in the second quarter. Soros bought a smaller number of CVI shares earlier last year but also sold them by the fourth quarter. The Texas-based company engages in fuel refinery and marketing transportation in the US. Likewise, it is a producer and marketer of nitrogen fertilizer products.
As of Sept. 7, 2012, CVR Energy stocks currently sell at $32.79. Its monthly performance shows an improvement of 12.06%. Compared to a year ago, it has gone up by a whopping 75.07%. In terms of profitability, the company's current profit margin is 5.20%, slightly lower than that of last quarter (6.70%). CVI's profit margin in the second and third quarter of 2011 was relatively more attractive at over 8%. CVI has been rated as below average in the one year low category. Based on data from Nasdaq, Carl Icahn owns the 71 million shares in CVI as of last quarter. Recently, Icahn has withdrawn his bid to purchase the remaining shares of CVR Energy, thus ending his offer to take the company private.
Arris Group Inc. (ARRS)
The hedge fund manager sold all 94 million shares he owns of Arris Group in the second quarter. ARRS consisted of 1.42% of Soros' portfolio. George Soros purchased large amounts of ARRS stock during the last quarters of 2010. Prior to the sold out, he also let go a great portion of this holdings in the last quarter of 2011. Arris Group Inc. is a Georgia-based company that operates in Broadband Communications Systems; Access, Transport, and Supplies; and Media and Communications Systems. It has a market capitalization of $1.57 billion.
Currently, ARRS stock sells at $13.86, up by 2.44% on Sept. 7, 2012. Its performance is up by 3.98% in the month. The year to date performance also grew by 28.10%. As of Sept. 7, the company's profit margin is at a dismal -2.08%. Aside from Soros, Capital Tactics also sold out its holdings in the communication equipment company. Dreman Value Management, OMT Capital, Steelhead Partners, and Tenor Capital are among the companies that increased their positions in ARRS.
Interoil Corporation (IOC)
This second quarter, Soros finally let loose of Interoil Corporation. Soros has sold all 1.57 million remaining IOC shares which used to consist of 1.19% of his portfolio. Soros' shares in the company used to be around 5% in the last quarter of 2011. It is noted that the hedge fund manager sold more than half (64%) of that earlier this year. IOC is an oil exploration company operating in Papua New Guinea with a market capitalization of $2.5 billion. Its petroleum licenses in Papua New Guinea cover about 3.9 million acres.
The current price of IOC is about $80. Compared to last week, its performance was down by 4.61%. However, the performance within the quarter has improved by 26.47%. One huge concern is its ability to raise profits. Interoil's net profit margin as of Sept. 7 is -2.39%. In 2011, the net margin was relatively better at 1.58%. Moreover, the company has an annual EPS growth of -12.27 for the past 5 years.
Aside from Soros, Jabre Capital and at least 18 more investors also sold all their shares in IOC. Analysts put it that this was due to the company's inability to keep its numerous promises. One of the issues that investors may also want to carefully consider in the future is the company's low cash position. Whether IOC is able to secure help to solve its liquidity troubles or not matters a lot in the company's ability to attract investors to its side. As of the second quarter filing, IOC is favored by Richard Chandler Holdings, Bank of America, and Altima Partners.
Chevron Corporation (CVR)
One the world's leading integrated energy companies, Chevron manages its subsidiaries and affiliates worldwide. These subsidiaries engage in petroleum, chemicals, and mining operations. They also conduct power generation and energy services. Chevron has a current market capitalization of around $222 billion. It has an average net production of 2.673 million barrels oil-equivalent per day in 2011. Chevron's global refining capacity as of end 2011 is at 1.96 million barrels per day. The San Ramon-based oil company has 61,000 full time employees.
Soros sold all the 682,000 stocks of Chevron that he bought in the first quarter of this year. It used to form 1.07% of the hedge fund manager's portfolio. Meanwhile, Chevron's stock is up 3% in the last week. It is now selling at $114. The monthly performance of the stock went by up 2.77% while the year to date performance is at 8.87%.
Chevron's profit margin is 11%, which is more or less in line with the market. The oil and gas company has a high dividend yield of 3.25% and a payout ratio of 24.49%. Chevron's average 5-year dividend yield is 3.10%. At the same time, the current payout is lower than its 5-year average of 29%. CVX's dividend yield is more attractive than that of Exxon (2.56%) but is lower than BP's 4.66%. Chevron's EPS growth estimate for the next 5 years is only 1.63%. Nevertheless, compared to its peers, the stock is selling at a discount with a P/E ratio of 8.42.