Billionaire Georoge Soros is one of the greatest investors alive. Having made his fortune in a variety of markets and in both bull and bear times, Soros is currently a billionaire many times over. Soros was born in Hungury in 1930, lived through Nazi occupation, and made his fortune on Wall Street through his hedge fund Soros Fund. Given that the American government requires big institutions to report some of their holdings every quarter, we get to see some of Soros fund’s moves. In this article, let’s take a look at how Soros navigated his portfolio in the fourth quarter in big tech names such as Advanced Micro Devices, Inc. (NYSE:AMD), Amazon.com, Inc. (NASDAQ:AMZN), Apple Inc. (NASDAQ:AAPL), Alibaba Group Holding Limited (NYSE:BABA), and Netflix, Inc. (NASDAQ:NFLX).
Our research has shown that hedge funds’ small-cap stock picks managed to beat the market by double digits annually between 1999 and 2016, but the margin of outperformance has been declining in recent years. Nevertheless, we were still able to identify in advance a select group of hedge fund holdings that outperformed the market by 32 percentage points since May 2014 through March 12, 2019 (see the details here). We were also able to identify in advance a select group of hedge fund holdings that underperformed the market by 10 percentage points annually between 2006 and 2017. Interestingly the margin of underperformance of these stocks has been increasing in recent years. Investors who are long the market and short these stocks would have returned more than 27% annually between 2015 and 2017. We have been tracking and sharing the list of these stocks since February 2017 in our quarterly newsletter.
Advanced Micro Devices, Inc. (NYSE:AMD)
Soros Fund sold out of its AMD shares, cutting a 308,500 position as the stock fell from its September highs. AMD shares fell in part due to a revenue miss and some revenue guidance in October. Investors also worried that Intel could be stronger competitor than previously expected. Fortunately for investors, AMD has bounced back in 2019, rising around 50% year to date as optimism around semiconductor names have returned.
Amazon.com, Inc. (NASDAQ:AMZN)
George Soros’ fund trimmed its equity stake in Amazon by 27% in the fourth quarter to 16,000 shares at the end of December. That stake was worth slightly north of $24 million at the time and accounted for 0.73% of Soros’ 13F equity portfolio at the end of 2018. Amazon shares have rebounded along with the broader market as investors like the company’s new potential initiatives in logistics, physical retail, and even healthcare.
Apple Inc. (NASDAQ:AAPL)
Soros Fund cut its entire stock stake in Apple in the fourth quarter, selling 89,300 shares. Apple wasn’t all that big of a position anyway as it accounted for 0.44% of Soros Fund’s 13F equity portfolio at the end of Q3. At the time, investors were concerned that Apple’s new iPhones weren’t selling as much as expected and that the company would have a hard time finding a new product to increase sales. Shares of Apple have since rebounded as sentiment has improved. Apple also has a large stock repurchase program.
Alibaba Group Holding Limited (NYSE:BABA)
Like Apple, Soros Fund also cut its entire equity stake in Alibaba in Q4 as the Chinese economy slowed during that period due in part to the U.S. China trade war. Alibaba shares might have some selling for a while as shares of Altaba, which owns a lot of Alibaba shares, plans to liquidate and distribute the proceeds of its Alibaba share liquidation and remaining assets. Despite all the negative news, shares of the e-commerce company are up 37% year to date.
Netflix, Inc. (NASDAQ:NFLX)
Soros Fund also cut its Netflix stake by 100% by selling 13,800 shares in the fourth quarter. Although it has a big content budget and a portfolio of hit original programming shows, Netflix will have a lot of future competitors that also have a lot of resources such as Disney with its Disney Plus and potentially AT&T. Netflix shares have done well against strong competitors before, with its stock rising despite competition from Amazon, however.
Disclosure:None
