Follow The Billionaires Part 7: Soros Funds Dividend Dogs

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Includes: BGCP, BRY, CNQ, EQM, ET, FLMN, GLOG, KAR, KRP, MMP, MO, NMFC, PACW, PNNT, SLB, TIVO, TRGP, VNOM, WES
by: Fredrik Arnold
Summary

Kiplinger Author James Brumley says, "Rich people get perpetually richer for a reason, so it could be worthwhile to study stocks that billionaires and funds plow their long-term capital into.

80 of 206 Soros Fund stocks showed big dividends as of 7/5/19. Top 10 ranged from 6.19%-10.44% by yield and ranged from 31.58%-176.22% by broker price-target-upsides.

10 top net gain Soros Fund dividend dogs boasted broker-estimated net gains from 29.39% to 180.02%.

$5k invested in the lowest-priced five top-yield Soros selected dividend dogs showed 15.84% more net-gain than from $5k invested in all 10. Little low-priced Soros select dogs ruled that pack.

Crunchbase says, "Soros Fund Management is a privately owned hedge fund sponsor. The firm invests in the public equity and fixed income markets across the globe. It also invests in foreign exchange and currency markets, commodity markets, and futures trading. Soros Fund Management was founded in 1969 and is based in New York, New York."

Foreword:

This series of articles has looked at (1,2, and 3) billionaire and hedge fund holdings beginning with 50 Kiplinger stocks selected from individual holdings of high net worth notables as penned by James Brumley, the author mentioned in bullet one above.

Then (4) we surveyed Warren Buffett and his Berkshire Hathaway (NYSE:BRK.A) (NYSE:BRK.B) collection of dividend dogs, followed by (5) a survey of 61 Solid Goldman Sachs dividend holdings, and then (6) looked at the dogs of BlackRock (NYSE:BLK), the world's biggest manager of fund holdings. Today is the seventh such search as we look at Soros Fund holdings.

Actionable Conclusions (1-10): Analysts Guesstimated 29.49% To 180.2% Net Gains For 10 Top Soros Select Dividend Dogs By July 2020

Three of 10 top Soros-held dividend stocks by yield were among the top 10 gainers for the coming year based on analyst one-year target prices. (They are tinted gray in the chart below). Thus, this yield-based forecast for Soros selected dogs was graded by Wall St. Wizards as 30% accurate.

Projections were based on estimated dividends from $1k invested in each of the highest yielding stocks and their aggregate one-year analyst median target prices, as reported by YCharts. Note: One-year target prices by lone analysts were not applied. 10 probable profit-generating trades projected to July 5, 2020 were:

Source: YCharts.com

TiVo Corp. (TIVO) was projected to net $1,801.75, based on a median of target price estimates from three analysts plus annual dividend, less broker fees. The Beta number showed this estimate subject to risk 77% less than the market as a whole.

Energy Transfer LP (ET) was projected to net $532.50, based on a median of target price estimate from 19 analysts, plus dividends, less broker fees. The Beta number showed this estimate subject to risks 56% more than the market as a whole.

GasLog Ltd. (GLOG) was projected to net $517.16, based on the median of target price estimates from 11 analysts, plus annual dividend, less broker fees. The Beta number showed this estimate subject to risks 14% more than the market as a whole.

Berry Petroleum Corp. (BRY) was projected to net $514.03, based on dividends, plus the median of target price estimates from eight analysts, less broker fees. A Beta number was not available for BRY.

Kimbell Royalty Partners (KRP) was projected to net $365.69, based on dividends, plus the median of target price estimates from eight analysts, less broker fees. A Beta number was not available for KRP.

KAR Auction Services Inc (KAR) netted $350.00 based on the median of estimates from 13 analysts, plus dividends. The Beta number showed this estimate subject to volatility, 49% less than the market as a whole.

Canadian Natural Resources (CNQ) was projected to net $348.00, based on the median of target estimates from 13 analysts, plus dividends, less broker fees. The Beta number showed this estimate subject to risks 15% more than the market as a whole.

Viper Energy Partners (VNOM) was projected to net $338.13, based on dividends, plus the median of target price estimates from 19 analysts, less broker fees. The Beta number showed this estimate subject to risk 38% more than the market as a whole.

Schlumberger Ltd. (SLB) was projected to net $306.61 based on dividends, plus the median of target estimates from 33 brokers, less transaction fees. The Beta number showed this estimate subject to risk 45% more than the market as a whole.

Falcon Minerals Corp. (FLMN) was projected to net $293.94, based on dividends, plus a mean target price estimate from nine analysts, less broker fees. A Beta number was not available for FLMN.

The average net gain in dividend and price was estimated at 53.68% on $10k invested as $1k in each of these 10 stocks. These gain estimates were subject to average risks 6% more than the market as a whole.

Source: top4download.com

The Dividend Dogs Rule

Stocks earned the "dog" moniker by exhibiting three traits: (1) paying reliable, repeating dividends, (2) their prices fell to where (3) yield (dividend/price) grew higher than their peers. Thus, the highest yielding stocks in any collection became known as "dogs." More precisely, these are, in fact, best called, "underdogs."

Soros Funds Holdings Sampled For July 2019

How did this collection of 80 Soros dividend dogs come to be?

The screening of a YChart data field started by finding how many of the 206 listed stocks paid dividends and we found 140, then narrowed the field to 80 by only selecting yields above 2.5%.

All had market capitalization over $100M and a $5 or higher price tag.

50 Soros Funds Holdings By Target Gains

Source: YCharts.com

5 Soros Funds Holdings By Yield

Source: YCharts.com

Actionable Conclusions (11-20): 10 Top Soros Funds Stocks By Yield

Top 10 Soros Funds stocks selected 7/5/19 by yield represented three of 11 Morningstar sectors.

Top dog was one of seven energy sector representatives in the top 10, EQM Midstream Partners LP (EQM) [1]. The other six energy representatives placed third through seventh and ninth: Kimbell Royalty Partners LP [3], Targa Resources Corp (TRGP) [4], Falcon Minerals Corp. [5]; Energy Transfer LP [6]; Western Midstream Partners LP (WES) [7], and Magellan Midstream Partners LP (MMP) [9].

Two financial services Soros Fund holdings placed second, and tenth: BGC Partners Inc. (NASDAQ:BGCP) [2] and PacWest Bancorp (PACW) [10].

A lone consumer defensive representative was eighth, Altria Group Inc (MO) [8], to complete the Soros Fund top 10 dogs by yield.

Actionable Conclusions: (21-30) Top 10 July Soros Dividend Dogs Showed 21.95%-176.69% Upsides While (31) No Downsiders Were Found

Source: YCharts.com

To quantify top dog rankings, analyst median price target estimates provided a "market sentiment" gauge of upside potential. Added to the simple high-yield metrics, analyst mean price target estimates became another tool to dig out bargains.

Analysts Forecast A 15.84% Advantage For Five Highest Yield, Lowest Priced Soros Fund Dividend Stocks To 2020

10 top Soros dividend dogs were culled by yield for this update. Yield (dividend/price) results provided by YCharts did the ranking.

Source: YCharts.com

As noted above, top 10 Soros Fund-held dividend dogs selected 7/5/19 showing the highest dividend yields represented three of 11 Morningstar sectors.

Actionable Conclusions: Analysts Predicted Five Lowest-Priced Of The Top 10 Highest-Yield BlackRock Dogs (32) Delivering 30.31% Vs. (33) 26.16% Net Gains by All 10 Come July 2020

Source: YCharts.com

$5k invested as $1k in each of the five lowest-priced stocks in the top 10 Soros Fund-held kennel by dividend yield were predicted by analyst one-year targets to deliver 15.84% more gain than $5k invested as $.5k in all 10. The third lowest priced selection, Energy Transfer LP, was projected to deliver the best net gain of 53.25%.

Source: YCharts.com

The five lowest-priced top-yield Soros Fund-held dividend dogs as of July 5 were: BGC Partners Inc., Falcon Minerals Corp., Energy Transfer LP, Kimbell Royalty Partners LP, Western Midstream Partners LP, with prices ranging from $5.47 to $31.95.

Five higher-priced Soros Fund-held dividend dogs as of July 5 were: PacWest Bancorp, Targa Resources Corp., EQM Midstream Partners LP, Altria Group Inc., Magellan Midstream Partners LP, whose prices ranged from $38.75 to $64.84.

The distinction between five low-priced dividend dogs and the general field of 10 reflected Michael B. O'Higgins' "basic method" for beating the Dow. The scale of projected gains based on analyst targets added a unique element of "market sentiment" gauging upside potential. It provided a here-and-now equivalent of waiting a year to find out what might happen in the market. Caution is advised, since analysts are historically only 20% to 80% accurate on the direction of change and just 0% to 20% accurate on the degree of change.

The net gain/loss estimates above did not factor in any foreign or domestic tax problems resulting from distributions. Consult your tax advisor regarding the source and consequences of "dividends" from any investment.

Stocks listed above were suggested only as possible reference points for your Soros Billionaire Picks stock purchase or sale research process. These were not recommendations.

Graphs and charts were compiled by Rydlun & Co., LLC from data derived from www.indexarb.com, YCharts, finance.yahoo.com, analyst mean target price by YCharts. Dog photo: top4download.com

Disclosure: I am/we are long T. I wrote this article myself, and it expresses my own opinions. I am not receiving compensation for it (other than from Seeking Alpha). I have no business relationship with any company whose stock is mentioned in this article.

Additional disclosure: This article is for informational and educational purposes only and should not be construed to constitute investment advice. Nothing contained herein shall constitute a solicitation, recommendation or endorsement to buy or sell any security. Prices and returns on equities in this article except as noted are listed without consideration of fees, commissions, taxes, penalties, or interest payable due to purchasing, holding, or selling same.