We recently published a list of 9 Best Stocks to Buy in 2024 According to Billionaire George Soros. Since Aramark (NYSE:ARMK) ranks 6th in the list, it deserves a deeper look.
Billionaire George Soros has been one of the most active and divisive figures in the Wall Street. Often a right-wing target, the billionaire handed over the control of his $25 billion empire to his son Alexander Soros last year. The 93 year-old Hungarian American is known as the philosopher investor in the Wall Street, mainly due to his contributions to philosophy and his deep desire to leave his mark in the world of philosophy, which many believe he fulfilled thanks to his General Theory of Reflexivity for capital markets.
George Soros founded Soros Fund Management in 1970. Since its inception through 2010, the fund posted on average a 20% annual rate of return. A Wall Street Journal report earlier this year said that Soros Fund Management has posted a compound annual return of 13.5% over the past three years through June 30, 2023.
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George Soros in his book The New Paradigm of Financial Markets wrote a chapter titled “Autobiography of a Failed Philosopher” in which he talked in detail about how many, including his son and his biographer, started accepting the idea that Soros was a failed philosopher. Soros talks in detail about his childhood, his relationship with his father who at one point, according to Soros, lost all ambition in life and did not amass any wealth. A Jew by birth, Soros decided to come to the UK after the Nazi occupation of Hungary. Soros’ first interactions with philosophy started when he was impressed by the works of Karl Popper. But Soros’ dreams of creating a career in philosophy could not realize for several reasons, some of which he talks about in his book:
“I would have preferred to stay within the safe walls of academe—I even had a teaching assistant job prospect at the University of Michigan in Kalamazoo, but my grades were not good enough, and I was forced to go out into the real world. After several false starts, I ended up working as an arbitrage trader, first in London and then in New York.* At first I had to forget everything I had learned as a student in order to hold down my job, but eventually my college education came in very useful. In particular, I could apply my theory of reflexivity to establish a disequilibrium scenario or boom-bust pattern for financial markets. The rewarding part came when markets entered what I called far-from-equilibrium territory because that is when the generally accepted equilibrium models broke down.”
For this article we scanned Billionaire Soros’s Soros Fund Management’s Q1 portfolio and chose its top 9 stock picks. Why are we interested in the stocks that hedge funds pile into? The reason is simple: our research has shown that we can outperform the market by imitating the top stock picks of the best hedge funds. Our quarterly newsletter’s strategy selects 14 small-cap and large-cap stocks every quarter and has returned 275% since May 2014, beating its benchmark by 150 percentage points (see more details here).
George Soros of Soros Fund Management
Aramark (NYSE:ARMK)
Billionaire George Soros’s Q1’2024 Stake Value: $66,958,680
Billionaire George Soros’s fund increased its stake in food service and facilities services provider Aramark (NYSE:ARMK) by 298% in the first quarter of 2024, ending the period with a $67 million stake in Aramark (NYSE:ARMK).
Last month the company posted fiscal Q2 results. Adjusted EPS in the period came in at $0.29, beating estimates by $0.02. Revenue in the quarter jumped 7.4% year over year to $4.2 billion, missing estimates by $40 million. For full year the company is expecting revenue growth of 9% and adjusted EPS growth of 30% to 35%. Aramark (NYSE:ARMK) is also a dividend-paying stock, with a 1.14% dividend yield. The company has been consistently increasing its dividend each year since 2014. As of the end of March the stock’s dividend payout ratio is just 0.33, attractive when company to peers where the industry average payout ratio is 0.59. The stock is trading at 17x its 2025 EPS estimate, which is not much higher than the industry median of 16.1. Given the company’s EPS growth estimates and Wall Street’s expectations of earnings growth of 24% for the company in 2025, the stock looks attractively valued. Aramark is one of the best stocks to buy in 2024 according to Soros’s fund.
Artisan Select Equity Fund made the following comment about Aramark (NYSE:ARMK) in its Q3 2023 investor letter:
“Aramark (NYSE:ARMK) was our weakest performer this quarter. The company reported strong Q2 results. Revenue grew 15%, and operating margins expanded. Both the contract catering and uniforms divisions showed good progress, and the company raised its guidance for the year. We suspect the share price performed poorly for a couple of reasons. First, the company has a fair bit of debt, and interest expense will increase if the debt is refinanced at today’s higher rates rather than paid down. However, the company is focused on debt reduction and does not pay a large dividend, giving it ample resources to pay down its debt. Second, the company spun off its uniform business to shareholders at the end of the quarter. This business is more cyclical than the catering business, and it came to market with a high degree of financial leverage. With fears around a recession, we believe investors steered clear of Aramark for lack of interest in the uniform business. We immediately sold our shares in the uniform business, Vestis, given its cyclicality and leverage. As of this writing, Vestis’ shares were down more than 20%.”
Overall, Aramark (NYSE:ARMK) ranks 6th in Insider Monkey’s list of 9 Best Stocks to Buy in 2024 According to Billionaire George Soros. You can visit 9 Best Stocks to Buy in 2024 According to Billionaire George Soros to see other stock picks of Billionaire George Soros. While we acknowledge the potential of Aramark (NYSE: ARMK), our conviction lies in the belief that AI stocks hold greater promise for delivering higher returns, and doing so within a shorter timeframe. If you are looking for an AI stock that is more promising than Aramark (NYSE:ARMK) but that trades at less than 5 times its earnings, check out our report about the cheapest AI stock.
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Disclosure: None. This article is originally published at Insider Monkey.