Below is the list of the 5 best stocks to buy now according to billionaire George Soros. If you want to read our comprehensive analysis of Soros’ investment philosophy, and hedge fund performance, read the 10 Best Stocks to Buy Now According to Billionaire George Soros.
5. QuantumScape Corporation (NYSE: QS)
Number of Hedge Fund Holders: 29
Electric vehicle battery maker QuantumScape Corporation (NYSE: QS) is the fifth-largest stock holding of Soros fund Management. The firm held 3.3 million shares of QuantumScape at the end of the first quarter, representing 2.78% of the overall portfolio. Shares of QuantumScape fell sharply by 40% year to date.
Baron Funds, an asset management firm, highlighted a few stocks including QuantumScape Corporation in an investor letter. Here is what Baron Funds stated:
“QuantumScape Corporation is an early-stage developer of solid-state battery technology for electric vehicles aimed at improving key aspects of batteries, including safety, charging times, energy density, and cost. The company went public via a SPAC in November. After rapid appreciation, the stock came under pressure when the company raised additional capital to help accelerate its commercialization process. We exited our small position, as described below.
We sold QuantumScape Corporation, an early-stage solid-state electric vehicle battery innovator, because it was an undersized position with an ambitious valuation. We will continue to monitor QuantumScape’s developments and may revisit the company as an investment at a future point in time.”
4. ViacomCBS Inc. (NASDAQ: VIAC)
Number of Hedge Fund Holders: 89
The media and entertainment company ViacomCBS Inc. (NASDAQ: VIAC) is the newcomer in Soros’ portfolio. His firm bought 4.3 million shares of ViacomCBS during the first quarter valued at around $194 million, accounting for 3.64% of the entire portfolio. Following a stunning rally in the first quarter, shares of Viacom plunged sharply last month. The company offers a dividend yield of 2.30% and its quarterly dividend is around $0.24 per share.
ViacomCBS experienced a significant increase in hedge fund activity during the first quarter. The number of hedge fund positions increased to 89 from 44 in the previous quarter.
3. Amazon.com, Inc. (NASDAQ: AMZN)
Number of Hedge Fund Holders: 243
Soros Fund Management increased its stake in the world’s largest e-commerce platform by 1136% to 4% of the overall portfolio, according to the latest filings. Shares of Amazon are under pressure since the beginning of this year due to investors’ concerns over slower revenue growth in the post-pandemic environment.
Polen Capital, an investment management firm, highlighted a few stocks including Amazon in the first quarter investor letter. Here is what Polen Capital stated:
“We purchased Amazon in February 2021, which accounts for 5% of the Portfolio’s weighting. For most of the last decade, Amazon did not meet our guardrails. We also did not have enough visibility into future free cash flow margins to indicate that the company would sustainably meet our guardrails and, relatedly, if valuation supported the double-digit annualized returns we seek. We now believe we have that visibility.
In 2008, almost all of Amazon’s revenue and operating profits came from its e-commerce business. Amazon Prime and Amazon Web Services (AWS) were new and relatively small back then. The company had roughly 5% operating profit margins overall, entirely from the e-commerce business. In 2009, the company began harvesting its retail business profits to accelerate investment in its distribution and logistics infrastructure globally and very heavily build out and scale AWS data centers. The company’s return on equity began to decline at that time and turned negative for three full years from mid-2012 to mid-2015 (margins and free cash flow declined similarly). So, beginning in 2010 and continuing to mid-2018, Amazon’s business was outside our guardrails. We chose to stick to our guardrails and not own Amazon.
Amazon’s profit drivers have changed quite dramatically over the years. Starting in the back half of 2018, Amazon came back above our hurdles. Revenue generation overcame ongoing heavy investments in areas such as delivery infrastructure, data center infrastructure, and shipping.
Our research suggests that today, after considering cost allocation, Amazon’s underlying profit drivers from higher-margin AWS and Advertising could grow much faster than its low-margin e-commerce business (excluding Prime), its historical driver of revenues and operating profits.
Amazon Prime, AWS, and Advertising together account for only about 20% of revenue today, but we believe over 150% of operating profits. Looking forward, growth higher-margin businesses means Amazon’s total margins and profit dollars could rise quite dramatically.
It is important to note that Amazon proved to be an exception to our guardrails. Based on our experience, very few companies that remain outside our guardrails for an extended period operate from a position of competitive strength but rather, from a position of competitive pressure. Today, we feel we have better visibility into the future earnings growth and margins from AWS and Advertising and believe these could drive 30%+ annual earnings growth for the next five years. Even with significant P/E multiple compression, we would still expect double-digit investment returns.”
2. D.R. Horton, Inc. (NYSE: DHI)
Number of Hedge Fund Holders: 50
Soros Fund Management raised its stake in D.R. Horton, Inc. (NYSE: DHI) by 19% to 4.4 million shares valued at $392 million. It the second-largest stock holding of Soros portfolio, according to the latest filings. Shares of DHI soared 34% year to date, enlarging the twelve-month gains to 72%. In addition to shares price gains, the company offers a dividend yield of 0.86%.
The best stock pickers were taking a less optimistic view. The number of long hedge fund positions went down by 14 to 50 at the end of the first quarter compared to 64 positions in the previous quarter.
1. Liberty Broadband Corporation (NASDAQ: LBRDK)
Number of Hedge Fund Holders: 70
The communications company Liberty Broadband Corporation (NASDAQ: LBRDK) is the largest stock holding of Soros Fund Management despite 20% stake sale in the first quarter. The family office portfolio held 4.2 million shares of Liberty at the end of the first quarter, accounting for 11.83% of the overall portfolio. Shares of Liberty Broadband underperformed this year compared to the broader market index.
Alphyn Capital Management, an investment management firm, mentioned Liberty Broadband Corporation in the first quarter investor letter. Here is what Alphyn Capital Management stated:
“Liberty Broadband completed its merger with GCI, thereby collapsing one layer of the double discount to Charter Communications, presenting a good opportunity to trim that position as well.”
You can also take a peek at 10 Best Small-Cap Stocks to Buy According to Billionaire Mario Gabelli and 10 Best Stocks that will Benefit from Biden’s $6 Trillion Plan.
