Billionaire George Soros is one of the wealthiest and most successful investors of all time. Through a combination of intense research, good market instincts, a top-down approach to investing, and supreme intelligence, Soros has become a billionaire many times over and shown his wisdom in the forex market, futures market, as well as the U.S. stock market. Unlike some other markets, we as average investors get to see how his fund, Soros Fund, was positioned every quarter through SEC filings. The last known filing for Soros Fund was December 31, 2018 and below are five of Soros moves concerning tech names such as Microsoft Corporation (NASDAQ:MSFT), Activision Blizzard, Inc. (NASDAQ:ATVI), QUALCOMM, Incorporated (NASDAQ:QCOM), Marvell Technology Group Ltd. (NASDAQ:MRVL), and Red Hat, Inc. (NYSE:RHT).
Our research has shown that hedge funds' small-cap stock picks managed to beat the market by double digits annually between 1999 and 2016, but the margin of outperformance has been declining in recent years. Nevertheless, we were still able to identify in advance a select group of hedge fund holdings that outperformed the market by 32 percentage points since May 2014 through March 12, 2019 (see the details here). We were also able to identify in advance a select group of hedge fund holdings that underperformed the market by 10 percentage points annually between 2006 and 2017. Interestingly the margin of underperformance of these stocks has been increasing in recent years. Investors who are long the market and short these stocks would have returned more than 27% annually between 2015 and 2017. We have been tracking and sharing the list of these stocks since February 2017 in our quarterly newsletter.
Microsoft Corporation (NASDAQ:MSFT)
Soros Fund sold out of its Microsoft position in the fourth quarter cutting, cutting 482,500 shares in the three months. Soros may have regretted that decision as shares of Microsoft have risen around 19% in 2019 on cloud optimism. Microsoft's market cap is now arguably within potential striking distance of the magic $1 trillion market cap number that both Apple and Amazon both hit. Unlike Apple, which depends on the iPhone for a big part of its business, Microsoft is arguably more diversified with strong income streams from Windows, Enterprise, and the cloud.
Activision Blizzard, Inc. (NASDAQ:ATVI)
Soros Fund sold 150,000 shares of the gaming company Activision Blizzard in Q4, ending 2018 with exactly 0 shares. Shares of the company fell sharply in November 2018 due to soft guidance for the fourth quarter. Sentiment around the name also softened due to competition from the game Fortnite. Nevertheless, some investors like Activision Blizzard's potential in virtual reality, augmented reality, and potentially cloud gaming.
QUALCOMM, Incorporated (NASDAQ:QCOM)
Soros Fund held 0 shares of Qualcomm at the end of 2018, down 134,400 shares from the end of Q3. The market didn't like some semi-conductor names in the fourth quarter, and QUALCOMM shares didn't do well. Despite its forward P/E of just 13.09 and 4.35% dividend yield at current prices, investors aren't as excited about Qualcomm's prospects as they were before. Analysts have an average target price of $64.63 per share.
Marvell Technology Group Ltd. (NASDAQ:MRVL)
Soros' fund trimmed its stake in MRVL by 85% in the fourth quarter, selling 1,028,668 shares in the three months, leaving it with a remaining position of 171,332 shares at the end of 2018. Those shares were worth north of $2.77 million on December 31. Shares of Marvell are up over 46% year to date as investors forward to the continued growth of the Internet of Things trend. Marvell's 'EZ-Connect' platform helps connect many global customers in wearbles, automotive, and industrial industries.
Red Hat, Inc. (NYSE:RHT)
Unlike the four other stocks mentioned in this article, Soros Fund actually established a new position in Red Hat in Q4 of 141,183 shares worth just under $24.8 million at the end of December. IBM agreed to buy Red Hat for $34 billion or $190 per share in cash last year to beef up its cloud business. Shares of the stock have trended higher to that number as more investors speculate that the deal will successfully close.