Now 93 years old, Soros has long given up running Soros Fund Management LLC,
US News and World Report
Brian O'Connell May 23, 2024
Investor George Soros isn't afraid to break a few eggs to make his favorite omelet. Whether it's famously shorting the British pound in 1992 for a cool $1 billion profit or funding numerous (and some say polarizing) political causes, Soros has proven to be a scene stealer on the public stage.
Now 93 years old, Soros has long given up running Soros Fund Management LLC, the family investment office that displaced Soros' Quantum Group of Funds hedge fund in 2011 (SFM is now an advisor to the hedge fund, which was launched in 1973). Yet his fingerprints and investment strategy largely remain the same in 2024, as exemplified by Soros Fund Management's latest 13F filing on May 15.
"Soros' basic theory of investing is that financial markets are chaotic," says Stephen Herbert Akin, founder of Akin Investments in Charleston, S.C. "People (like Soros) who buy and sell stocks, bonds and currencies determine their pricing, and these traders frequently make decisions based more on intense emotions than on calm, calculated reasoning."
While most investors find opportunities by closely examining the market pricing and asset values, Soros is different. "He focuses on a theory of 'reflexivity,' which is predicated on the idea that the prejudices of individual investors impact the economy and market exchanges," Akin says.
The Soros team did make specific changes as its 13F portfolio value slid from $7.65 billion to $6.02 billion during the first quarter of 2024. The portfolio has 193 positions with 29.65% invested in the top 10 holdings.
SFM soured on Splunk Inc. (ticker: SPLK) after first buying it in the third quarter of 2023, fully exiting its position with the sale of 1.6 million shares. SPLK previously took up 3.1% of the portfolio and was the top holding in the fourth quarter. The Soros team also sold its shares of iShares Russell 2000 ETF (IWM) and exited a larger IWM put position.
Meanwhile, SFM added 255,000 shares to its put position in Invesco QQQ Trust (QQQ), a 42.5% increase, for a market value of $380 million. It held its put position in iShares iBoxx $ High Yield Corporate Bond ETF (HYG). These two positions make up 6.3% and 3.2% of the portfolio, respectively. The Soros team also added a new Rivian Automotive Inc. (RIVN) note worth $154 million, at 2.6% of the portfolio, and a put position in Cloudflare Inc. (NET) worth $145 million, at 2.4% of holdings.
Aside from these moves, what are the top names in the SFM portfolio right now, and how do its adjustments reflect the George Soros playbook? (Note that the following positions represent only the Soros fund's direct stock holdings and do not include its various equity options and debt positions.)
Here's a closer look:
Alphabet Inc. (GOOGL)
The Soros team was a buyer of Alphabet in the first quarter of 2024, snapping up 271,549 shares of the tech giant'sstock. That makes GOOGL king of the hill in the Soros realm these days, moving from 2.2% of the portfolio in the fourth quarter of 2023 to 3.7% in Q1 2024. Soros has been an Alphabet shareholder since 2017 and has pocketed big gains as shares have more than tripled in value since his first GOOGL trade, while the stock has outperformed the S&P 500 in the same timeframe. Soros Fund Management now holds 1.5 million GOOGL shares (up from 1.2 million in late 2023) valued at about $225 million. Alphabet shares are up 27.3% so far in 2024, as of May 22.
Portfolio weight: 3.7%
Market value of shares: $225 million
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AerCap Holdings NV (AER)
The Soros team cut its position in this aircraft leasing company by 20.4% in Q1 to a total of 1.97 million shares valued at $170.9 million. Headquartered in Dublin, Ireland, AerCap specializes in leasing aircraft to global airlines and has done an excellent job of it over the years, building its market cap to $18 billion. On May 8, the company announced it was boosting its quarterly dividend by 25 cents per share along with a proposed $500 million stock buyback program. That's good news for shareholders, who love to see a company that puts more cash in investors' pockets and has enough confidence in its stock to repurchase $500 million in shares. AER stock is performing well, up 23.3% on a year-to-date basis and up roughly 55% over the past year.
Portfolio weight: 2.8%
Market value of shares: $170.9 million
Novo Nordisk A/S (NVO)
SFM slashed its position in pharmaceutical giant Novo Nordisk by 48.7% in the first quarter of 2024, shedding 757,214 shares in the process. That cuts its weighting in NVO from 2.1% in Q4 2023 to 1.7% in Q1 2024. Denmark-based Novo Nordisk has hit a grand slam with its weight loss drug Wegovy, which not only helps users shed pounds but also may curb the risk of heart attack, stroke and heart-related death in patients with cardiovascular disease, according to a 2023 study. With demand for Wegovy outstripping supply, NVO took an earnings hit in the last quarter, yet revenue doubled even as Wegovy sales waned in the first quarter of the year due to lack of supply. The Soros team seems to be betting against NVO, but if Novo Nordisk can push supply one step ahead of demand, watch out for a surging share price later in 2024.
Portfolio weight: 1.7%
Market value of shares: $102.4 million
SFM slashed its position in pharmaceutical giant Novo Nordisk by 48.7% in the first quarter of 2024, shedding 757,214 shares in the process. That cuts its weighting in NVO from 2.1% in Q4 2023 to 1.7% in Q1 2024. Denmark-based Novo Nordisk has hit a grand slam with its weight loss drug Wegovy, which not only helps users shed pounds but also may curb the risk of heart attack, stroke and heart-related death in patients with cardiovascular disease, according to a 2023 study. With demand for Wegovy outstripping supply, NVO took an earnings hit in the last quarter, yet revenue doubled even as Wegovy sales waned in the first quarter of the year due to lack of supply. The Soros team seems to be betting against NVO, but if Novo Nordisk can push supply one step ahead of demand, watch out for a surging share price later in 2024.
Portfolio weight: 1.7%
Market value of shares: $102.4 million
Cerevel Therapeutics Holdings Inc. (CERE)
Cerevel is a brand-new position for SFM, with an initial $82 million stake in the company after purchasing 1.94 million shares in Q1 2024. The Cambridge, Massachusetts, company is only five years old, but it's already making waves in the neuroscience disease sector, developing new therapies for schizophrenia, epilepsy and Parkinson's disease. The stock is lagging in 2024, down 1.8%, but CERE has already driven its market share up to $7.6 billion. Cerevel cleared its pivotal phase 3 Tempo-3 trial for its Parkinson's disease drug tavapadon with flying colors. Cerevel is also facing an $8.7 billion buyout by AbbVie Inc. (ABBV), for $45 per share in cash. That deal is expected to close in the next several months, Cerevel's management team has reported.
Portfolio weight: 1.4%
Market value of shares: $82 million
Liberty Broadband Corp. (LBRDK)
The Soros team made no changes to this position in Q1, although soft performance curbed LBRDK's percentage of the portfolio to 1.3% in Q1 2024. Portfolio managers had sliced Liberty Broadband holdings by 20.7% in the third quarter of 2022, with no significant trading activity since that time. The portfolio now holds 1.4 million shares of the stock at a $79.5 million market value. Liberty Broadband, a cable, broadband and mobile technology company and the parent of Charter Communications, has been a Soros mainstay since he first purchased shares in the second quarter of 2016.
Liberty's share price hasn't justified that faith of late, down a whopping 35.5% year to date, although shares have rebounded 5% in the past month. On May 8, the company reported revenues had fallen from $246 million in Q1 2023 to $245 million in Q1 2024. That led to an immediate "sell" call from Pivotal Research, which lowered its price target from $113 to $94 per share. Liberty's stock closed at $52.02 per share on May 22.
Portfolio weight: 1.3%
Market value of shares: $79.5 million
Amazon.com Inc. (AMZN)
Soros portfolio managers were sellers of AMZN in the first quarter of 2024, shedding 29% of their holding, a reduction of 161,452 shares. The position's market value is now $71.3 million, or 1.2% of the entire Soros portfolio. Amazon shares are up 20.5% in 2024 and 59.3% over the past year as of May 22.
Amazon is stacking up successes in cloud computing and artificial intelligence and is in the middle of an operational reorganization, as it revives its logistical expansion plan and looks to recast its U.S. distribution efforts. Amazon Web Services recently posted its best quarter in a year, with net sales up 17.1% in Q1 2024. Cash flow levels are up to over $50 billion after a recent spending spree abated, and the stock's reasonable $183.13 share price (as of May 22) suggests plenty of room to grow once the economy improves and consumers open up their wallets again.
Portfolio weight: 1.2%
Market value of shares: $71.3 million
Takeaway on Soros Stocks
Overall, Q1 was a period of significant change for the Soros Fund Management portfolio, but Wall Street experts advise regular investors not to take too much from the portfolio shift.
"It's hard to glean too many lessons from the Soros Fund's 13F filing because (it) has multiple strategies and invests across the capital stack, so their positions could be hedges for bets made elsewhere, including private investments not disclosed in 13F filings, or capital structure arbitrage trades," says Drayton D'Silva, CEO at Tower Hills Capital in New York.
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