The stock market may be trading at record-highs, but many investors believe equities are overvalued, making it difficult to find companies with great upside potential. If actions speak louder than words, it might be a good idea to see what George Soros’ economic predictions for 2015 are; he is one of the world’s most successful hedge fund managers after all.
George Soros’ Hedge Fund and Economic Predictions in 4Q14
With a net worth of $24.2 billion, George Soros is ranked #29 on Forbes’ list of the world’s richest billionaires. The manager of Soros Fund Management, Soros is the 19th richest billionaire in the United States and the second-highest-earning hedge fund manager. (Source: Forbes.com, March 2, 2015.)
How do we know what George Soros’ stock market prediction for 2015 is? We just need to read over the Soros Fund Management SEC Form 13F. Every institutional investment manager with more than $100 million in qualifying assets has to file a quarterly report with the Securities and Exchange Commission (SEC) detailing the securities held, number of shares, and total market value. Form 13Fs provide investors with an insider’s look into the portfolios of well-known investors.
In 2014, Soros Fund Management took a negative tone with the U.S. economy with the surprise announcement it sold out its holdings in several banking giants, including JPMorgan Chase & Co. (NYSE/JPM), Bank of America Corporation (NYSE/BAC), and Citigroup Inc. (NYSE/C). I say “surprise” because the divestiture came shortly after Soros Fund Management took an initial stake in JPMorgan and Citigroup.
Soros Fund Management’s Top Stock Holdings
Soros Fund Management has a market cap of $9.16 billion and is made up of 300+ equities. As you would expect, Soros Fund Management is widely diversified. Its biggest holdings include Information Technology (27%), followed by Health Care (18%), Finance (11%), Energy (10%), Consumer Discretionary (9%), Utilities and Telecommunications (9%), and Materials (7%).
During the fourth quarter of 2014, Soros Fund Management made new purchases in 56 stocks, made additional purchases in 54 stocks, divested itself of 136 stocks, and reduced holdings in 47 stocks. (Source: U.S. Securities and Exchange Commission web site, last accessed March 31, 2015.)
If you want to see what George Soros’ economic prediction for 2015 is, just look at his biggest holdings.
Soros’ top five holdings are as follows:
- Alibaba Group Holding Limited (NYSE/BABA): 4.4 million shares; valued at $457.33 million
- YPF Sociedad Anónima (NYSE/YPF): 11.65 million shares; valued at $303.38 million
- Teva Pharmaceutical Industries Limited (NYSE/TEVA): 4.85 million shares; valued at $279.50 million
- The Dow Chemical Company (NYSE/DOW): 5.18 million shares; valued at $236.40 million
- LyondellBasell Industries N.V. (NYSE/LYB): 2.83 million shares; valued at $224.95 million
Collectively, these top five holdings account for approximately 16.5% of Soros Fund Management, but that doesn’t mean he treats the top five equally. During the fourth quarter, he held steady on Alibaba, increased his holding in Dow Chemical by 78%, and reduced his holdings in YPS (13%) and Teva Pharmaceutical (23%). Soros is clearly bullish on LyondellBasell, because the chemical maker jumped into the fifth-top spot as a new addition to the portfolio in the fourth quarter.
What Stocks Soros Fund Management Is Bearish and Bullish On
To get an inside look at George Soros’ economic predictions for 2015, we need to look at what he’s bullish and bearish on. In other words, what is Soros adding to his fund and what is he getting rid of?
What Is George Soros Bullish On?
A few of the equities Soros Fund Management took a significant stake in include:
- Dow Chemical;
- EQT Corporation (NYSE/EQT), an independent oil and gas company;
- Level 3 Communications, Inc. (NYSE/LVLT), a communications services provider;
- General Motors Company (NYSE/GM);
- Spansion Inc. (NYSE/CODE), which specializes in semiconductors;
- Actavis plc (NYSE/ACT), a generic drug maker;
- Vipshop Holdings Limited (NYSE/VIPS), a catalog and mail order company; and
- TransCanada Corporation (NYSE/TRP), an oil and gas pipelines business.
In part, this tells me that even though oil prices are down, production remains robust and that oil needs to get transported no matter what. Strong inroads in the China-based catalog and mail order company Vipshop show Soros is also bullish on some emerging economies. He’s also betting on an expanding U.S. and developed economies.
What Is George Soros Bearish On?
Which equities did Soros turn sour on during the fourth quarter? Soros significantly decreased his holdings in the following:
- Yahoo! Inc. (NASDAQ/YHOO)
- Motorola Solutions, Inc. (NYSE/MSI)
- Churchill Downs Incorporated (NASDAQ/CHDN)
- JDS Uniphase Corporation (NASDAQ/JDSU)
- Western Refining, Inc. (NYSE/WNR)
- BroadSoft, Inc. (NASDAQ/BSFT)
Soros is either happy to take profits off the table, or he’s bearish about some technology stocks and unsure we’ll have enough discretionary income to spend at the tracks or in the casinos.
George Soros’ Stock Market Predictions for 2015
Finally, investors need to take a close look at what Soros is adding and divesting from his portfolio. During the fourth quarter, Soros added 56 stocks to Soros Fund Management.
As previously stated, Soros made strong inroads with LyondellBasell, along with medical equipment company Hologic, Inc. (NASDAQ/HOLX), generic drug maker Endo International plc (NASDAQ/ENDP), peer-to-peer lending company LendingClub Corporation (NYSE/LC), quick-service restaurant giant YUM! Brands, Inc. (NYSE/YUM), and cigarette maker Lorillard, Inc. (NYSE/LO).
During the fourth quarter, George Soros eliminated a large number of stocks from his portfolio—136 to be exact. Some of the more well-known companies include Apple Inc. (NASDAQ/AAPL), Barrick Gold Corporation (NYSE/ABX), American Express Company (NYSE/AXP), Capital One Financial Corporation (NYSE/COF), salesforce.com, inc. (NYSE/CRM), Google Inc. (NASDAQ/GOOG), LinkedIn Corporation (NASDAQ/LNKD), Microsoft Corporation (NASDAQ/MSFT), Netflix, Inc. (NASDAQ/NFLX), Pan American Silver Corp. (NASDAQ/PAAS), Sirius XM Holdings Inc. (NASDAQ/SIRI), Barclays PLC (NYSE/BCS), Wynn Resorts, Limited (NASDAQ/WYNN), Exxon Mobil Corporation (NYSE/XOM), and Yelp, Inc. (NYSE/YELP).
Judging by his fourth-quarter holdings, Soros appears to think the underlying economies of developed companies will be ramping up in 2015; even emerging economies like China will continue to perform well. Not surprisingly then, Soros is pessimistic about precious metals and concerned about consumer debt, discretionary spending, and technology stocks.
How accurate is Soros Fund Management in predicting U.S. and global economic growth in 2015? We’ll have to check back in the next few quarters to see what he’s increasing and decreasing his positions on to discover the answer.