Even though they are two of the most well-known billionaire investors, George Soros and Louis Moore Bacon don’t otherwise have a lot in common. However, Moore is a global macro trader, a genre that also includes Georges Soros. They both participate in most of the global markets by focusing their moves on future trends of inflation, economic growth, and central bank policy, among other factors. Interestingly, at the beginning of the 1980’s Bacon started working as a futures broker at Shearson Lehman Brothers, while some of his clients included another billionaire, Paul Tudor Jones, who was a trader for George Soros’ Quantum Fund at that time. It might have happened that Bacon gained some insight into their style of trading from those interactions, and that’s probably why 15% of Moore and Soros’ portfolios are in identical stocks, as they agree on a handful of companies according to their most recent 13F filings. The billionaires have come to a consensus on these four tech stocks among others: Alibaba Group Holding Limited (NYSE:BABA), Baidu Inc. (NASDAQ:BIDU), Yahoo! Inc. (NASDAQ:YHOO) and Facebook Inc. (NASDAQ:FB).
At Insider Monkey, we track hedge funds’ moves in order to identify actionable patterns and profit from them. Our research has shown that hedge funds’ large-cap stock picks historically underperformed the S&P 500 Total Return Index by an average of seven basis points per month between 1999 and 2012. On the other hand, the 15 most popular small-cap stocks among hedge funds outperformed the S&P 500 Index by an average of 95 basis points per month (read the details here). Since the official launch of our small-cap strategy in August 2012, it has performed just as predicted, returning over 142% and beating the market by more than 84 percentage points. We believe the data is clear: investors will be better off by focusing on small-cap stocks utilizing hedge fund expertise (while avoiding their high fees at the same time) rather than large-cap stocks like Facebook and Alibaba.
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Alibaba Group Holding Limited (NYSE:BABA) is up first on our list of tech stocks owned by both George Soros and Louis Bacon. Soros Fund Management reported in its most recent 13F filing that it owns 4.44 million American Depositary Shares (ADS) valued at $369.97 million in Alibaba, whereas Moore Capital Management holds a slightly smaller equity stake of 2.13 million ADSs worth $176.91 million. The American Depository Shares of Alibaba have dropped by 20% since the beginning of the current year; however, a number of research hubs, including the research team at BNP Paribas, maintain a “Buy” rating on Alibaba, with price targets over $100. Recently, Alibaba has been in talks to buy 25% of India’s largest local manufacturer, Micromax, for roughly $700 million. Alibaba is attempting to penetrate the fast-growing smartphone sector in that country through the acquisition of local brands, because foreign brands tend to struggle on the Indian market. Within our database, Rob Citrone’s Discovery Capital Management represents the largest investor in Alibaba Group Holding Limited (NYSE:BABA), holding 8.77 million shares.
