Billionaire George Soros' Long-term Picks
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Multibillionaire George Soros, a Hungarian-American hedge fund manager and political activist, is well known for currency speculation and “breaking the Bank of England” in the early 1990s. His Soros Fund Management disclosed in its latest 13F filing a portfolio of different bonds and equities and reflects his bearish outlook on the broad market. Soros has a very interesting take on the economics behind the Euro Crisis, claiming that much of the present European market situation, along with the Financial Cliff scenario in the United States; create an inherent epistemic gap between the market reality and investors. Thus, his investment approach tries to recognize bubbles—mismatches between market trends and investor biases—and capitalizes on them. This article reviews some of Soros' long-term plays, including only holdings that Soros' fund has held at least since 2010.
Soros Fund Management has held a Qualcomm, Inc. (NASDAQ: QCOM) position of various sizes over the past few years, presently holding about 605,000 shares, down from a little over 1 million shares in 2010. As we noted previously, Qualcomm is very well positioned to profit from the worldwide conversion to 3G wireless technology in developing economies and to 4G in the United States and Europe. Qualcomm also collects royalties on about 40 percent of Apple's (NASDAQ: AAPL) iPhone sales. As the tablet revolution continues, and as mobile phones become more heavily commoditized, a company with the production efficiency of Qualcomm stands to have considerable advantage as a supplier of mobile electronics components.
Exar Corporation (NASDAQ: EXAR) produces a variety of semiconductor solutions for telecommunication, industrial, storage, and network applications. Though earnings are projected to be in the red for year ending March 2012, the consensus earnings estimate for the year ending March 2013 is about $0.20 per share, which is expected to increase to $0.40 per share in 2014. Though the company's sales have recently been sluggish, it has a very strong balance sheet with practically no debt as a percentage of equity. The company has recently restructured its mission, reducing its total headcount by 40 percent and eliminating $22 million in gross annual spending within a period of 90 days. The company derived 53 percent of its revenue in fiscal year 2012 from connectivity solutions and another 22 percent from power management solutions. The company intends to exploit its thirty years of experience in mixed-signal and analogue electronics solutions in order to increase its market share in these areas. Soros' position in the stock has steadily increased in the past few years and presently sits at about 6.6 million shares.
To round off the tech recommendations with a retail holding, Macy's (NYSE: M) has also been a mainstay in Soros' portfolio. The company's shares are trading at some of their highest levels in over five years .The stock is sensitive to the broader market (beta=1.6), though it has handsomely outperformed the S&P over the past decade and every time frame I examined (2-year, 5-year, 10-year, and 15-year). Unlike J.C. Penney (JCP), Macy's, Inc., which also operates the Bloomingdale's, has seen its brand name steadily appreciate in its history and, in particularly, over the past decade. The company's shares are trading at 12 times 2012 consensus earnings, which is below that of Nordstrom (JWN) and Saks (NYSE: SKS), which are trading at 18 times and 22 times, respectively.
This article is written by Brian Tracz and edited by Meena Krishnamsetty. Brian has long positions in AAPL and JCP. Meena has a long position in AAPL. The Motley Fool owns shares of Apple and Qualcomm. Motley Fool newsletter services recommend Apple. Try any of our Foolish newsletter services free for 30 days. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy.If you have questions about this post or the Fool’s blog network, click here for information.