When it comes to investing, few have the fame, wealth, and track record of billionaire investor George Soros. His hedge fund, Soros Fund Management, has been one of the best performing firms in the business. With technology being one of the fastest-growing segments in the market today, let’s look at how George Soros is taking advantage of the booming industry.
Here are George Soros’s top five technology stock picks:
Alibaba Group Holding Limited (NYSE/BABA)
Soros Fund Management owns 4.4 million shares of Alibaba Group Holding Limited (NYSE/BABA), worth $370 million. The e-commerce giant makes up about 3.64% of Soros’s portfolio.
Alibaba has solid financials. In the quarter ended March 31, 2015, revenue increased 45% to $2.81 billion. Its earnings fell due to employee stock awards. Excluding the share-based compensation expense, Alibaba’s earnings-per-share (EPS) increased seven percent to $0.48 a share, beating analysts’ estimate of $0.43 a share.
The company also has huge growth potential as it aggressively expands to a number of industries. The company is going to partner with Intel Corporation (NASDAQ/INTC) to expand its cloud service overseas; it had signed a strategic agreement with Shanghai Media Group to expand into the financial information services industry; its film division is raising $1.6 billion to finance future acquisitions; and it would launch an online video streaming service in China.
eBay Inc. (NASDAQ/EBAY)
Soros seems to have a liking for e-commerce companies. His hedge fund owns 3.3 million shares of eBay Inc. (NASDAQ/EBAY), worth around $191.9 million and making up 1.88% of the portfolio.
Despite increasing competition in the sector, eBay managed to improve its operating results in the first quarter of 2015. Revenue increased four percent year-over-year to $4.4 billion. It non-GAAP EPS was up 10% to $0.77.
A large part of eBay’s growth was driven by its PayPal business. PayPal’s net total payment volume surged 18% in Q1 2015 to $61.0 billion. The payment system also gained 3.6 million new active accounts during the period, representing an 11% increase.
Cypress Semiconductor Corporation (NASDAQ/CY)
George Soros owns 13.2 million shares of Cypress Semiconductor Corporation (NASDAQ/CY). His stake in the company is worth around $186.5 million, or 1.83% of his portfolio.
The company closed a $5.0 billion merger with Spansion Inc. in March 2015. The combined new company became the number one provider of static random access memories (SRAMs), as well as the number one provider of NOR flash memories. The merger is expected to be accretive to non-GAAP earnings within the first year after the close of the deal. Within three years, the company expects the merger to achieve more than $135 million in annual cost synergies.
Level 3 Communications, Inc. (NYSE/LVLT)
Soros Fund management has approximately 3.5 million shares of Level 3 Communications, Inc. (NYSE/LVLT), valued around $186 million and contributing 1.83% to the fund’s portfolio.
Level 3’s Core Network Services (CNS) revenue grew six percent year-over-year on a constant currency basis in Q1 2015. Net income came in at $122 million with earnings of $0.35 per share for the quarter.
The company has raised its outlook for the remainder of this year. Adjusted EBITDA is expected to grow by 14% to 17% for the full year of 2015. Level 3 also expects to generate $600 to $650 million in free cash flow, up from the $550 to $600 million in the prior forecast.
Polycom, Inc. (NASDAQ/PLCM)
Soros owns 10.8 million shares of Polycom, Inc. (NASDAQ/PLCM), worth approximately $144.8 million and making up 1.42% of his hedge fund’s portfolio.
Revenue increased by one percent to $330.7 million in the first quarter of 2015. Non-GAAP EPS grew an impressive 28% to $0.23. Polycom’s non-GAAP operating margin improved to 12.6%, a 25% increase year-over-year. The company also generated $30.0 million in operating cash flow for the quarter.
Most of Polycom’s revenue growth comes from Europe and Asia Pacific. Business in the Americas, however, declined four percent year-over-year.