Every quarter, many money managers have to disclose what they've bought and sold, via "13F" filings. Their latest moves can shine a bright light on smart stock picks.
George Soros is known to some folks these days for his politics and philanthropy, but his fame stems from his wealth, which is a result of his outstanding investing prowess. He founded Soros Fund Management back in 1973, and under its umbrella, the Quantum funds racked up an amazing record, reportedly averaging close to 20% annual growth over four decades . He has noted, though, that hedge funds can't beat the market due to fees.
As The New York Times has explained, "His huge gains have come from macro bets, which aim to profit from global economic trends by trading currencies, commodities, bonds and other securities. Mr. Soros made his name, however, betting on currencies."
The company's reportable stock portfolio totaled $8.6 billion in value as of March 31, 2013.
So what does Soros's latest quarterly 13F filing tell us? Here are a few interesting details:
The biggest new holdings include MeadWestvaco and Brocade Communications Systems. Other new holdings of interest include Baidu (NASDAQ: BIDU) and Cheniere Energy (NYSEMKT: LNG). Baidu has seen its stock fall about 17% over the past year, partly due to China's economic growth slowing. Baidu's last earnings report was disappointing (despite many impressive numbers), but its long-term prospects remain solid, as much of China and Asia has yet to get online. Still, it does have serious competition. One of the company's latest moves is expanding into video.
Cheniere stock has more than doubled over the past year, on great expectations for its planned liquid natural gas (LNG) export terminal. Cheniere is facing greater competition lately, though, as more companies seek approval to transport natural gas to nations without free trade agreements with the U.S. Exporting a lot of gas could result in rising prices for it here at home, by the way.
Among holdings in which Soros Fund Management increased its stake was Sarepta Therapeutics (NASDAQ: SRPT). Sarepta has seen its stock soar more than eightfold over the past year, and some still see it as undervalued. Its stock fell a while back on news that after Sarepta petitioned the FDA for accelerated approval for its Duchenne muscular dystrophy drug, eteplirsen, the FDA requested more information. Management is optimistic about its recent interactions with the FDA, though.
A more recent holding announcement for Soros is a big stake in struggling retailer J.C. Penney. The share purchases were announced in April, while the latest 13F filing only reflects activity in the quarter ended on March 31. Some of our analysts suggest that buying the retailer might be like lighting money on fire.
Soros Fund Management reduced its stake in lots of companies, including Micron Technology (NASDAQ: MU), which is trading near its 52-week high lately. Its advocates see growth in tablets and smartphones driving demand for memory chips, though a sputtering PC market isn't helpful. Bulls liked its second-quarter earnings report, too, which featured lower costs and rising margins that hinted at a return to profitability soon. Micron's purchase of Japanese manufacturer Elpida also seems promising, boosting its capacity and its relationship with Apple. Bears worry about Micron losing market share, though, and don't like the commoditization of memory or Micron's debt.
Finally, Soros's biggest closed positions included JPMorgan Chase and General Electric. Other closed positions of interest include RF Micro Devices (NASDAQ: RFMD), which specializes in high-performance radio-frequency technology. The company received an analyst upgrade in March, due to its successful diversification away from Nokia and its profitable growing presence in Samsung and Apple devices. Since then, the stock has hit a 52-week high, and some are hoping that it will do a lot of business in China. Its recently reported fourth quarter featured revenue up 49% over year-ago levels, but its free cash flow has been falling, while net income has also shrunk.
We should never blindly copy any investor's moves, no matter how talented the investor. But it can be useful to keep an eye on what smart folks are doing. 13-F forms can be great places to find intriguing candidates for our portfolios.