Even though George Soros is 75 years old, he's still in the game. This legendary hedge fund manager and multibillionaire is making a big bet on technology, having invested (according to a recent filing with the Securities and Exchange Commission) more than $2 billion in companies such as Intel (NASDAQ:INTC), Amazon.com (NASDAQ:AMZN), IBM (NYSE:IBM), eBay (NASDAQ:EBAY), Microsoft (NASDAQ:MSFT), and Apple Computer (NASDAQ:AAPL).
So what's he up to? "Soros has been a successful investor [in the] long term by making big bets on sectors," says Laura Martin, the senior media analyst with Soleil/Media Metrics. "So a big bet on tech stocks is simply indicative of his investment style."
That style was evident when he beat the Bank of England in 1992. Essentially, he forced its to withdraw from the European exchange rate mechanism -- and made about $1 billion overnight.
Of course, don't expect Soros to make a quick killing on his latest mega-bet. Even if he guesses right, the tech stocks he has targeted are those of big-cap old-tech companies. In other words, he is passing on newer tech stocks -- like Google (NASDAQ:GOOG) -- which appear to have frothy valuations and seemingly infinite potential for appreciation on the surface. It seems that Soros believes the old-tech issues have been neglected for too long.
The obvious implication is that Soros is a smart investor who's put a lot of money behind his positions. While he takes big bets, he also is very mindful of mitigating risks. And I think that by focusing more on old-tech stocks -- which have been out of favor for a long time -- he's taking a close look at some very high-quality holdings. These companies have huge amounts of cash flow, dominant positions in their market, mega-brands, extensive distribution and market clout, and fairly cheap multiples.
But for those with a lusty eye, keep in mind that Soros' record is certainly not perfect. In 1998, for example, he was on the wrong side of a bet on Russian debt and lost about $2 billion.
"Soros' hedge-fund investing style is getting popular, but [it's] not necessarily appropriate for any individual investor," said Jack Li, a finance professor at Northeastern University's College of Business Administration. "But a bet is a bet. Nobody guarantees a bull market. Investing in tech stocks is only timing."
This doesn't mean you should avoid tech stocks, either. Actually, a grouping of old-tech issues does look cheap, and they all have strong market positions. Of course, while billionaires can bet the ranch, individual investors can't, or at least really shouldn't. The old-fashioned principles of diversification and asset allocation are still smart moves for individual investors. Keep that in mind as you build and maintain your portfolio.
Amazon and eBay are Motley Fool Stock Advisor recommendations.
Fool contributor Tom Taulli does not own shares of the companies mentioned in this article.
