George Soros is one of the biggest names in the hedge fund industry, a man who redefined success in the investment landscape. Forbes ranks him at number 29 on its list of billionaires, pegging him with a real-time net worth of $24.2 billion. He gained his fame in 1992 after shorting the British pound and was subsequently called “the Man Who Broke the Bank of England.” Soros Fund Management is his family office, and according to its recent 13F filing with the SEC, it has a public equity portfolio containing $10.75 billion in holdings. Scott Bessent is the chief investment officer of the investment firm, though Mr. Soros continues to be actively involved in the investment process. Soros Fund Management invests primarily in the finance and information technology sectors. In this post, we are going to review some of the new stock picks of Mr. Soros during the second quarter, which are Charles Schwab Corp (NYSE:SCHW), Alcoa Inc (NYSE:AA), and NRG Energy Inc (NYSE:NRG).
Why are we interested in the 13F filings of a select group of hedge funds? We use these filings to determine the top 15 small-cap stocks held by these elite funds based on 16 years of research that showed their top small-cap picks are much more profitable than both their large-cap stocks and the broader market as a whole. These small-cap stocks beat the S&P 500 Total Return Index by an average of nearly one percentage point per month in our backtests, which were conducted over the period of 1999 to 2012. Moreover, since the beginning of forward testing from August 2012, the strategy worked just as our research predicted, outperforming the market every year and returning 118% over the last 35 months, which is more than 60 percentage points higher than the returns of the S&P 500 ETF (SPY) (see more details).
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Charles Schwab Corp (NYSE:SCHW) is among the latest additions to the equity portfolio of Soros Fund Management, which reported ownership of 1.96 million shares of the company valued at $63.98 million. The shares of the wealth management and financial advisory firm have grown by 13.11% year-to-date, including gains of 7.26% in the second quarter. Charles Schwab Corp (NYSE:SCHW) beat the Wall Street estimates for its earnings and revenue for the second quarter, posting earnings per share of $0.25 over revenues of $1.57 billion. The market was expecting EPS of $0.24 over quarterly revenues of $1.54 billion. At the end of July the company had client assets worth $2.56 trillion under management, an 8% year-over-year growth. Phill Gross and Robert Atchinson’s Adage Capital Management is another major shareholder of the company, holding 2.52 million shares with a market value of $82.16 million.
Soros Fund Management initiated a new position in Alcoa Inc (NYSE:AA) worth $59.53 million and consisting of 5.34 million shares of the company. Alcoa is involved in the engineering and manufacturing of lightweight metals such as aluminum, titanium, and nickel. It has been a difficult year so far for the company, with its shares dropping by 40.63% year-to-date. It is quite possible that Soros Fund Management initiated its new position believing them to be discounted due to the current weakness in commodity prices. Alcoa Inc (NYSE:AA) fell slightly short of Wall Street’s earnings expectations for the second quarter, with reported earnings per share of $0.19 against expectations of $0.22, although its revenue of $5.9 billion was above the market’s estimate of $5.81 billion. On a year-over-year basis, its revenue improved by 1% and earnings were up by 16% in comparison with the prior-year quarter. David E. Shaw’s D E Shaw holds a significant investment in the company worth $62.80 million from 5.63 million shares of Alcoa Inc (NYSE:AA).
NRG Energy Inc (NYSE:NRG) is a power company with nearly 52,000 MWs of energy generation which operates through its different subsidiaries. Soros Fund Management gained more exposure to the energy sector with this addition to its portfolio, which amounts to 2.52 million shares worth $57.68 million. NRG Energy Inc (NYSE:NRG) reported lower-than-expected second quarter results, with a loss per share of $0.06 over revenues of $3.40 billion. The market was expecting earnings per share of $0.06 over revenues of $3.69 billion. In terms of analysts ratings, the shares of NRG Energy have received an average rating of “Buy” with a short term price target of $31.14, representing an upside of nearly 50%. Israel Englander’s Millennium Management has a large position in NRG Energy Inc (NYSE:NRG) of 9.51 million shares valued at $217.67 million.
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