George Soros Makes Big Q4 Move in Tech Stocks
George Soros is a legendary investor and one of the richest people on the planet, with a net worth of around $8.0 billion. He is also the name behind the $3.3-billion Soros Fund Management LLC.
The fund released its 13F form on February 14, giving investors an insight into the publicly traded stocks that the fund purchased, added, reduced holdings in, and exited in the fourth quarter of 2018. It was a very busy quarter for Soros Fund Management, with the fund exiting some big tech names, trimming its holdings, and adding others.
Tech Stocks Faced Serious Pressure in Q4 2018
As mentioned, Soros made some big moves on the tech front in the fourth quarter of 2018. And frankly, it was a good quarter to make drastic moves in. The markets witnessed a sell-off in October and a meltdown in December, making the valuations on some stocks much more attractive.
It was also a quarter in which some of the biggest names in the tech industry, stocks that people tend to believe will continue to rise, were under serious pressure.
Thanks to a number of high-profile industry missteps, including cybersecurity problems, privacy lapses, and broad-based corporate apathy, investors soured on big tech stocks. Concerns about the trade war between the U.S. and China (the world’s two largest economies), and whether tech stocks could continue to report growing revenue and earnings, also weighed heavily on share prices.
Soros Fund Management Updates
Soros bet heavily against President Donald Trump and lost billions of dollars. He’s been taking a more proactive approach since then.
In the fourth quarter of 2018, Soros Fund Management exited holdings of some of the biggest and most popular tech names in the industry.
|Soros Fund Management Q4 2018 Activity|
|Q4 2018 Market Value||$3.3 Billion|
|Prior Market Value||$4.6 Billion|
|New Purchases||44 stocks|
|Additional Purchases||23 stocks|
|Sold Out Of||69 stocks|
|Reduced Holdings In||82 stocks|
(Sources: “Soros Fund Management F13, Q4 2018 Form 13F Information Table,” U.S. Securities and Exchange Commission, February 14, 2019; “Soros Fund Management F13, Q3 2018 Form 13F Information Table,” U.S. Securities and Exchange Commission, November 14, 2018.)
Exited Tech Stock Holdings
During the fourth quarter, the fund dumped all 490,100 of its shares in Micron Technology, Inc. (NASDAQ:MU), all 482,500 of its shares in Microsoft Corporation (NASDAQ:MSFT), all 273,100 of its shares in Spotify Technology SA (NYSE:SPOT), and all 308,500 of its shares in Advanced Micro Devices, Inc. (NASDAQ:AMD).
Soros also sold all 150,000 of his shares in Activision Blizzard, Inc. (NASDAQ:ATVI), all 134,400 of his shares in QUALCOMM, Inc. (NASDAQ:QCOM), all 91,200 of his shares in Alibaba Group Holding Ltd (NYSE:BABA), and all 89,300 of his shares in Apple Inc. (NASDAQ:AAPL).
Reduced Tech Stock Holdings
Soros reduced his holdings in Cypress Semiconductor Corporation (NASDAQ:CY) by 5,500,000 shares, reduced his holdings in Pandora Media (NYSE:P) by 4,191,315 shares, reduced his holdings in Sprint Corp (NYSE:S) by 70,900 shares, reduced his holdings in salesforce.com, inc. (NYSE:CRM) by 20,000, and reduced his holdings in Amazon.com, Inc. (NASDAQ:AMZN) by 6,100 shares.
Additional Tech Stock Purchases
Despite exiting and trimming his holdings in major tech companies, George Soros still has faith in the technology sector. He has been adding tech stocks to his portfolio.
During the fourth quarter, Soros added 11,300 shares of Alphabet Inc (NASDAQ:GOOG) (also known as Google), bringing his total holdings in the company to 25,000 shares.
He also boosted his holdings in T-Mobile Us Inc (NASDAQ:TMUS) by 491,000 shares and his holdings in Coupa Software Inc (NASDAQ:COUP) by 40,000 shares.
New Positions in Red Hat and Verizon
In the fourth quarter, the firm also took new positions in two technology stocks: Red Hat Inc (NYSE:RHT) and Verizon Communications Inc. (NYSE:VZ).
Soros took a new position of 141,183 shares in Red Hat. This gives the open source software giant, which has a market cap of $32.2 billion, a portfolio weight of 0.89%. In the fourth quarter, the RHT stock price averaged $160.00.
Chart courtesy of StockCharts.com
During the fourth quarter, it was announced that IBM (NYSE:IBM) was acquiring Red Hat Inc in a blockbuster deal worth $34.0 billion. That translates into $190.00 per share, or a 62% premium on the company’s share price at the time.
This acquisition, which is the largest software deal in history, is expected to close in the second half of 2019. (Source: “IBM To Acquire Red Hat, Completely Changing The Cloud Landscape And Becoming World’s #1 Hybrid Cloud Provider,” Red Hat Inc, October 28, 2018.)
Soros also purchased 612,315 shares of the communication services giant Verizon. This translates into a portfolio weight of 1.24%. has a market cap of $230.7 billion. During the fourth quarter, Verizon’s share price averaged $57.00.
Chart courtesy of StockCharts.com
George Soros and the Tech Sector
The tech sector was volatile in the fourth quarter of 2018, with stocks having the worst December since the Great Depression and tech stocks ending a nine-year winning streak. It’s been a different story in 2019, with tech stocks being one of the biggest winners.
Some of the tech stocks that Soros exited and reduced his holdings in have gone on to realize massive gains in 2019. At the same time, stocks like T-Mobile and Coupa, two companies that Soros stocked up on, have also had spectacular runs in 2019.
Soros Fund Management’s new position in Red Hat Inc paid off well, we presume, but Verizon is currently in the trough of a roller coaster ride.
Soros is not alone when it comes to exiting and adding tech stocks to his fund on a regular basis. He’s doing what all smart investors do: realign and balance their portfolios regularly.
What’s interesting about Soros, though, is that he has, for quite some time, bashed tech stocks.
He called Facebook, Inc. (NASDAQ:FB) and Google a “menace” that have become obstacles to innovation. Moreover, he said they have become “ever more powerful monopolies” that would be tempted to compromise themselves. (Source: “George Soros: It’s ‘only a matter of time’ before dominance of Facebook and Google is ‘broken’,” CNBC, January 25, 2018.)
That may be, but Soros knows it’s his job to make Soros Management Fund money. He also knows that the best place to do that is the tech sector. This might explain why, even after verbally trashing Facebook, he took a position in the social media behemoth in the second quarter of 2018 and sold his entire position just before the markets took a nosedive in October.
It’s impossible to time the market, even if you’re George Soros. That said, Soros seems, for the most part, eerily well informed when it comes to market cycles.
Tech stocks continue to be well represented in Soros Fund Management and, despite being skeptical of tech stocks, Soros knows they are the future. That’s why he invests in strong tech companies with competitive advantages and strong fundamentals—and sells when he thinks the tide is about to turn.