Five Notable Moves by Billionaire George Soros’ Fund

The latest 13F filing by the family office of billionaire George Soros, Soros Fund Management, is actually a proof that the maverick investor always puts his money where his mouth his. Earlier this year, Mr. Soros  had stated that China is on the verge of a credit crisis similar to the one that U.S. experienced in the period between 2007-2008 , and as a consequence of that soon U.S. stocks would start falling and gold will start moving higher. According to Soros Fund Management ‘s latest filing, it reduced the size of its US equity portfolio to $4.53 billion from nearly $6.05 billion. Moreover, several of the new stakes initiated by the family office during the first quarter, including its top stock holding, were in stocks of gold mining companies. The filing also revealed that during the first quarter the equity portfolio of the family office saw a quarterly turnover of 117.26% and its top 10 equity holdings at the end of the quarter accounted for 43.29% of the value of its equity portfolio. Since Soros Fund Management reshuffled its portfolio in a major way during the first period, in this post, we will focus on the top five moves made by the fund during that period.

We track prominent investors and hedge funds because our research has shown that historically their stock picks delivered superior risk-adjusted returns. This is especially true in the small-cap space. The 15 most popular small-cap stocks among a select group of investors delivered a monthly alpha of 80 basis points between 1999 and 2012 (see the details here).

Gaming and Leisure Properties Inc (NASDAQ:GLPI)

– Shares Owned by Soros Fund Management (as of March 31): 1.81 million

– Value of Holding (as of March 31): $55.84 million

Let’s begin with Gaming and Leisure Properties Inc (NASDAQ:GLPI), a stock in which Soros Fund Management increased its stake by 30% during the first quarter. Shares of the Pennsylvania-based real estate investment trust (REIT) have been on fire since March and even the mixed quarterly numbers the company reported in April hasn’t been able to cool them off as they currently trade up nearly 18% year-to-date. In spite of such a large move that the stock has seen in the past three months, it still sports a lucrative annual dividend yield of 6.84% currently. For its fiscal 2016 first quarter, the REIT managed to beat analysts’ EPS estimate by $0.03 by declaring EPS of $0.70, however, the revenue of $148.8 million it declared missed the projection slightly by $0.27 million. Robert Hockett‘s Covalent Capital Partners made exactly the opposite move that Soros Fund Management made during the first quarter and reduced its stake in Gaming and Leisure Properties Inc (NASDAQ:GLPI) by 30% during the first quarter to 764,743 shares.

Equinix Inc (NASDAQ:EQIX)

– Shares Owned by Soros Fund Management (as of March 31): 206,215

– Value of Holding (as of March 31): $68.2 million

Soros Fund Management upped its stake in data centers company Equinix Inc (NASDAQ:EQIX) by 111% during the first quarter. Due to a 243% rise in its stock in the last five years and the tremendous growth the company has shown during that time, several analysts consider Equinix Inc (NASDAQ:EQIX) as the best play in the cloud space currently. While the stock has already appreciated 14% so far this year, many of those analysts believe that it will continue to move higher in the coming quarters led by the growth in hybrid cloud and Internet of Things (IoT). On May 5, analysts at Stifel Nicolaus reiterated their ‘Buy’ rating on the stock while boosting their price target on it to $380 from $340, which represents a potential upside of 10% from the stock’s current trading price.  The company recently sold eight of its European data centers to Digital Realty Trust, Inc. (NYSE:DLR) for $874 million. Hedge funds that lowered their stake in during the first quarter included Jeffrey Tannenbaum’s Fir Tree, which brought its holding down by 6% to 688,201 shares.

Zoetis Inc (NYSE:ZTS)

– Shares Owned by Soros Fund Management (as of March 31): 2.32 milion

– Value of Holding (as of March 31): $102.71 million

After reducing its stake in Zoetis Inc (NYSE:ZTS) by 4% during the last quarter of 2015, Soros Fund Management further reduced it by 31% during the first quarter. Shares of  Zoetis Inc (NYSE:ZTS)’s stock has held on quite well amid the downturn in the pharmaceutical sector this year, losing only 2.5% of its value so far in 2016. While some analysts attribute the reason for that outperformance to the different space in which the company operates (animal vaccines and medicines) versus other large biopharmaceutical companies, others attribute it to the consistent effort the company has been making in increasing efficiency and improving its margins. In his first quarter letter to investors, Pershing Square’s Bill Ackman wrote about Zoetis: ” We continue to be pleased with management’s performance and have high expectations for the company. […] We no longer feel that our presence on the board is required as the company continues to generate strong progress as evidenced by first quarter results.” According to a recent regulatory filing by Pershing Square, as of May 10, it owns 24.97 million or 5.0% of Zoetis’ outstanding stock.

Adecoagro SA (NYSE:AGRO)

– Shares Owned by Soros Fund Management (as of March 31): 13.97 million

– Value of Holding (as of March 31): $161.30 million

With Soros Fund Managemnt reducing its stake in the company by 46% during the first quarter, Adecoagro SA (NYSE:AGRO) lost its spot as the fund’s top stock pick and became its second-largest equity holding at the end of March. The family office has held a stake in Adecoagro SA (NYSE:AGRO) from the first quarter of 2011, when the company had its IPO. Although shares of the agro-industrial company ended the first quarter with a loss of only 6%, they have fallen considerably in the present quarter and are currently trading down over 15% year-to-date. On May 13, the company reported EBITDA of $43.2 million and net income of $2.8 million for its fiscal 2016 first quarter, compared to EBITDA of $20.28 million and a net loss of $5.5 million posted a year earlier. Following the earnings release, on May 14, analysts at Credit Suisse reiterated their ‘Buy’ rating on the stock.

Barrick Gold Corporation (USA) (NYSE:ABX)

– Shares Owned by Soros Fund Management (as of March 31): 19.42 million

– Value of Holding (as of March 31): $263.71 million

Soros Fund Management initiated a stake in Barrick Gold Corporation (USA) (NYSE:ABX) during the first quarter and the position was the fund’s largest at the end of March. Barrick Gold Corporation (USA) (NYSE:ABX)’s stock has seen an unprecedented 147% rise so far this year led by a rally in gold prices. However, it is still trading down by over 50% from the levels seen back in 2011. According to analysts, the stock can soon bounce back if gold continues its rally going forward. The 28 leading analysts and research houses on the street that track the stock of the Canadian gold mining company currently have an average rating of ‘Overweight’ and an average price target of $21.78, which represents a potential upside of 20% from the stock’s current trading price. Bruce Kovner‘s Caxton Associates initiated a stake in Barrick Gold Corporation during the first quarter by purchasing 11.56 million shares of the company.

Disclosure: None