George Soros doesn’t hold Wall Street darlings like Apple Inc. (NASDAQ/AAPL), Wal-Mart Stores Inc. (NYSE/WMT), Intel Corporation (NASDAQ/INTC), Google Inc. (NASDAQ/GOOG), or Microsoft Corporation (NASDAQ/MSFT); Soros Fund Management closed those positions in the fourth quarter of 2014. So, where is George Soros investing? The following are the top stocks to watch in George Soros’ portfolio and the ones he’s banking on in 2015.
Top 10 George Soros Stocks to Watch in 2015
1. Alibaba Group Holding Limited (NYSE/BABA)
The first of the top 10 George Soros stocks to watch in 2015 is Alibaba Group Holding Limited, which accounts for about five percent of Soros Fund Management, making it the largest position. The company is the largest e-commerce business globally, with 334 million annual active buyers on its online marketplaces. With 80% of its sales coming from Chinese retail marketplaces, dubbed Taobao and Tmall, Alibaba Group is a big bet on the growth of the Chinese consumer. (Source: Alibaba Group Holding Limited, January 29, 2015.)
2. The Dow Chemical Company (NYSE/DOW)
Soros added 78% to his position in The Dow Chemical Company as of the fourth quarter of 2014, driving up his portfolio allocation to 2.6%. Dow Chemical generates 63% of its sales outside of North America, offers 6,000 products, and relies heavily on its performance plastics division, which accounts for 40% of the company’s sales. (Source: The Dow Chemical Company, March 27, 2015.) With Dow Chemical’s unprecedented scale and access to technology, it often dominates competitors in basic and specialty chemical businesses.
3. LyondellBasell Industries N.V. (NYSE/LYB)
LyondellBasell is a new position for Soros Fund Management. This company has a total of 180 securities in its portfolio. LyondellBasell is similar to Dow Chemical, as it is focused on plastics, chemicals, and refining. It produces everything from ethylene (hormone in plants) to polyethylene (the world’s most important plastic used for packaging and bottling), and it refines gasoline and diesel. While analysts expect earnings to decline for 2015 year-over-year, the picture for 2016 is brighter. (Source: The Wall Street Journal web site, last accessed April 2, 2015.)
4. EQT Corporation (NYSE/EQT)
EQT Corporation is a North American energy producer and refining company operating in the northeastern United States. Soros Fund Management added 44% to this position, bringing the holding into the top 10 stocks in George Soros’ portfolio. Over the past three years, 61% of EQT’s revenue has come from natural gas sales. The remainder of the sales have come from EQT Midstream, which is responsible for natural gas gathering, regulated storage, and transmission through pipelines. (Source: EQT Corporation, January 31, 2015.)
The company has consistently grown its reserves in the Marcellus shale in Pennsylvania and West Virginia, and has excellent well economics, even at $3.00 natural gas prices. This makes it the low-cost producer in an oversupplied North American natural gas market. Not to mention the 23% production growth expected for 2015.
5. Zoetis Inc. (NYSE/ZTS)
Zoetis Inc. comes in at nearly two percent of the $9.2-billion Soros Fund Management portfolio. Zoetis is in the business of animal health medication and vaccines serving veterinarians and farmers. With Zoetis products being sold in more than 120 countries, the company generated $4.8 billion in revenue with 65% derived from the farm animal products segment.
The company missed its 2014 annual earnings target by 32%, but is expected to ramp up earnings by 43% for 2015. Most of this improvement is largely built into the stock, as it is trading near its 52-week highs. Zoetis operates in a fragmented industry, with no competition from generics and significant pricing power.
6. Hologic, Inc. (NASDAQ/HOLX)
Hologic was a new addition for Soros Fund Management in the last quarter of 2014, adding exposure to a healthcare and diagnostics equipment company to George Soros’ invested funds. Hologic has been on a bumpy ride lately, losing $1.2 billion in 2013 and squeaking out $17.0 million in net income for 2014. (Source: Hologic Annual Report, November 20, 2014.)
The company is a leader in mammography, controlling more than 60% of the U.S. market, and its 2013 acquisition of Gen-Probe lends it the top spot in diagnostic examination equipment for women. Hologic diagnostic products are also used to screen for sexually transmitted diseases, to test blood for other infectious disease, and to produce 3D mammography. Earnings are set to increase to $1.66, in 2015, up from $0.06 in 2014, as Hologic capitalizes on the adoption of 3D mammography, which improves cancer detection substantially.
7. General Motors (NYSE/GM)
George Soros’ investment in General Motors (GM) via Soros Fund Management was increased by 12% before the end of 2014. General Motors boasts two cars in the top-five best-selling vehicles in the U.S., including the “Chevrolet Silverado” and “Dodge Ram” pickups. However, sales of smaller cars are also strong, giving GM a 17.4% share in the U.S. light-vehicle market, compared to 15.5% for Ford Motor Company (NYSE/F) and 12.4% for Chrysler. (Source: The Wall Street Journal web site, last accessed April 2, 2015.)
The U.S. automobile marketplace is clearly competitive, with the “Detroit Three” constantly fighting for the top spot. However, GM’s focused lineup, lower cost structure compared to 2009, and strong industry sales will support the automaker’s profits in 2015.
8. Herbalife Ltd. (NYSE/HLF)
Before the 2014 year-end, Soros increased his position in Herbalife by 83%. The company’s product lineup spans protein shakes, snacks, and energy drinks, along with vitamins and nutritional supplements. Herbalife grew sales by three percent in 2014 and 18% in 2013, but resolution of the William Ackman allegations is what is likely to drive shares forward.
On March 11 of 2014, the billionaire owner of Pershing Square Capital, Mr. Ackman, completed a presentation that put forth allegations regarding Herbalife’s business practices in China. Since then, shares have declined 36% as probes by the Federal Trade Commission and Securities and Exchange Commission (SEC) continue. (Source: The Wall Street Journal web site, last accessed April 2, 2015.)
9. Energen Corporation (NYSE/EGN)
Another notable holding in the George Soros portfolio is Energen Corporation, an oil and gas exploration and production company. With operations in the Permian Basin in west Texas, the company derives 74% of its revenue from oil and the remainder from natural gas and natural gas liquids. Energen grew revenues seven percent in 2014 and 25% in 2013. (Source: “Energen 2014 Annual Report,” Energen Corporation web site, last accessed April 2, 2015.)
Energen runs a lean operation with total costs per barrel of oil produced near $42.00. The current North American spot price for light crude oil (at the time of this writing) is at $49.55, giving Energen some breathing room. However, like most energy companies, Energen’s earnings are expected to be lower in 2015 and 2016, compared to the $1.76 a share earned in 2014.
10. United Continental Holdings, Inc. (NYSE/UAL)
Our last of the top 10 George Soros stocks to watch in 2015 is United Continental Holdings, Inc., owner of United Continental Airlines. The largest airline operator in the U.S. is expected to increase earnings by 270% in 2015, as the company benefits significantly from lower fuel prices, healthy U.S. consumer spending, an extensive destination network, and a consolidated industry dominated by only four players in the U.S. (Source: The Wall Street Journal web site, last accessed April 2, 2015.)
It must be noted here that the above are just examples of what the most successful money manager, George Soros, is probably favoring. Those looking to invest in 2015 have to do their due diligence; use this list as just a starting point to finding the best George Soros stocks to watch in 2015.