We track quarterly 13F filings from hundreds of hedge funds and other notable investors, including billionaire George Soros. These filings can be used to help develop investment strategies- for example, we have found that the most popular small cap stocks among hedge funds earn an average excess return of 18 percentage points per year (learn more about our small cap strategy)– and we can also comb through individual filings. By screening Soros’s top picks in a number of areas, including stocks with recent insider purchases, we can identify initial investment ideas which might be of interest to investors. Read on for our quick take on Soros’s five largest holdings as of the end of March with at least one insider purchase in the last three months (or compare these picks to Soros’s previous filings).
In early March, a Board member at Charter Communications, Inc. (NASDAQ:CHTR) purchased over 1,700 shares at an average price of $87.06 per share; Soros, meanwhile, had the TV, Internet, and phone company as one of his largest stock holdings in the 13F. Charter Communications’s business is relatively unaffected by broader economic conditions, and as a result the stock’s beta is 0.4. The stock is valued at a trailing EV/EBITDA multiple of 9.1x, which seems a bit high given the stable financial performance per recent quarterly reports. Billionaire Stephen Mandel’s Lone Pine Capital owned 4.6 million shares of Charter Communications, Inc. (NASDAQ:CHTR) (find Mandel’s favorite stocks).
Multiple insiders were buying shares of $12 billion market cap energy company EQT Corporation (NYSE:EQT) in early April; our analysis of studies on insider trading has shown that stocks bought by multiple insiders are particularly likely- though not certain- to outperform the market. Read more about studies on consensus insider purchases. EQT’s share price is up 82% in the last year, with revenue and earnings also rising strongly. A good deal of future improvements are already priced in- the forward P/E is 26- but growth has been high enough that EQT Corporation (NYSE:EQT) still might be worth a look. Soros increased his stake by 49% between January and March, to a total of 3.1 million shares.
Soros was selling American International Group Inc (NYSE:AIG) during Q1, but still owned 2.9 million shares per the filing. One of AIG’s Board members bought 10,000 shares in May at a bit over $45 per share. With a number of hedge funds selling the stock during the first quarter of 2013, American International Group Inc (NYSE:AIG) lost its place as the most popular stock among hedge funds (which it had held at the beginning of the year) to Apple (NASDAQ:AAPL). See our full top ten list of hedge funds’ favorite picks. Currently American International Group Inc (NYSE:AIG) is valued at 0.7 times the book value of its equity, making it still a value play on that basis, and consensus forecasts for 2014 imply a forward earnings multiple of 11.
Another of Soros’s picks- he disclosed ownership of 1.6 million shares, nearly triple what he had owned at the beginning of the year- where we’ve recorded an insider purchase is fertilizer company Mosaic Co (NYSE:MOS). Fertilizer companies, and stocks tied to agriculture in general, are generally carrying low multiples at this time and Mosaic is no exception at 14 times trailing earnings. Earnings were up 26% in its most recent quarter compared to the same period in the previous fiscal year, though revenue rose only 2%. We’re somewhat interested in agriculture over the long term, given the growing world population and intensity of meat consumption, and would be interested in comparing Mosaic Co (NYSE:MOS) to its peers.
Macy’s, Inc. (NYSE:M) rounds out our list of stocks with an insider purchase in the last three months which Soros owned a sizable stake in at the beginning of April. The $19 billion market cap department store has actually been experiencing growth on both top and bottom lines, in contrast to struggling peers such as J.C. Penney Company, Inc. (NYSE:JCP). The stock carries trailing and forward P/Es of 15 and 11, respectively, as Wall Street analysts predict EPS growth over the next year and a half. Renaissance Technologies, founded by billionaire Jim Simons, initiated a position of 2.4 million shares (check out Renaissance’s stock picks).
Disclosure: I own no shares of any stocks mentioned in this article.
