Sometimes identifying the best stocks to buy can be difficult, but you could do a lot worse than check out the stocks selected by one of the world’s wealthiest hedge fund managers — George Soros.
Self-made Soros fled Hungary and funded his way through an economics degree by working as a railway porter and waiter. Years of successful investing gave him a net worth of $25.2 billion and the no. 1 ranking on Forbes’ hedge fund manager rich list. (Warren Buffett, who has a whopping $75 billion net worth, wins the no.1 title for the wider finance and investments community). In 1992, Soros shorted the British pound and reportedly made a profit of $1 billion. He became known as the man who broke the Bank of England.
Now we can track the latest trades of his family office, Soros Fund Management. Just-released SEC forms reveal a valuable glimpse into which stocks Soros likes, and which he doesn’t. I looked back over 2017 and pinpointed Soros’ best stock picks this year. These are the stocks that this legendary hedge fund manager is most bullish on. Note that Soros has just shifted an incredible $18 billion from the fund to charity. Following the move, the fund manages about $4 billion in portfolio assets.
Here I also include TipRanks’ stock insights from Wall Street’s best-performing analysts. Does the Street sentiment match Soros’ stocks to buy — or is Soros going rogue with his stock picks? We can check the overall analyst consensus as well as the average target price. This indicates how far the stock can spike over the coming months.
“If investing is entertaining, if you’re having fun, you’re probably not making any money. Good investing is boring” says Soros. With this sobering thought in mind, let’s dig down into Soros’ top seven stock picks of 2017:
George Soros Stocks to Buy: Altaba (AABA)
Investment company Altaba Inc (NASDAQ:AABA) is seen by many as a cheap play on Chinese e-commerce giant Alibaba Group Holding Limited (NYSE:BABA). Since initiating the position in Q217, Soros has built up a position of 2.8 million shares valued at $185.7 million. This makes AABA the fourth-largest stock in the fund’s portfolio.
AABA, formerly Yahoo!, has a 15% stake in Alibaba which is now worth a massive $65 billion. AABA is up 81% year-to-date largely due to its valuable BABA stake. Nonetheless, the stock still trades at a big discount to the sum of its assets. It is likely that at some point the company will wind down and distribute its value to shareholders.
In the meantime, however, five-star Oppenheimer analyst Jason Helfstein is bullish on AABA’s outlook. He says shares are undervalued and reiterated his buy rating on Nov. 7. “We are raising our AABA target to $99 from $75, following a more bullish outlook for BABA shares. BABA reported strong F2Q results, with the Ant Financial SME loan business growing ~400% y/y. As a result, we increased our BABA target price to $220.” Other elements supporting AABA include: the market value of Yahoo Japan shares ($9 billion) as well as its cash & marketable debt securities portfolio.
Overall the stock has a relatively positive Moderate Buy analyst consensus rating on TipRanks. The average analyst price target of $85 indicates 23% upside from the current share price.
George Soros Stocks to Buy: SolarEdge Technologies (SEDG)
Soros has just initiated a new position in solar energy leader SolarEdge Technologies Inc (NASDAQ:SEDG). He snapped up 695,305 SEDG shares worth close to $20 million in Q3. The company has just delivered very impressive third quarter earnings results with “near flawless” execution. For the quarter, SEDG reported revenue of $166.5M, easily beating guidance of $155M to $165M.
“We’re staying buyers as this innovator is delivering what growth investors want — big revenue and margin upsides/guides (with the added benefit of solid cash flow)” comments top Canaccord Genuity analyst John Quealy. He has a buy rating and $40 price target on the stock.
“While the broader solar market is experiencing the typical boom/bust dynamics that many other industrial growth sectors have, SolarEdge’s differentiated power conversion and control offerings offer a clearer path toward secular profit improvement, in our view” says Quealy. However he adds that “shares will still likely exhibit volatility given the dependence on solar, risks around increased competition, and pricing pressures.” A key date to look out for is President Trump’s final import tariff decision expected on January 12/13.
Overall, this “Strong Buy” stock has received seven buy ratings in the last three months and just one hold rating. (Note however that if we look at only top analysts the stock has 100% buy ratings.) Meanwhile the average analyst price target stands at close to 10% upside from the current share price.
George Soros Stocks to Buy: InterXion (INXN)
Throughout 2017, Soros has been ratcheting up his stake in data storage pioneer InterXion Holding NV (NYSE:INXN). Now Soros holds 400,000 INXN shares worth almost $20.4 million. Luckily for Soros, INXN has just delivered very strong earnings results for the third quarter. Five-star Oppenheimer analyst Timothy Horan also ramped up his INXN price target from $55 to $62 last month.
“INXN reported strong growth helped by an improved European economy, strong cloud growth and charging for cross-connects” says Horan. He believes that “Europe is in the early stages of cloud adoption; we see a long runway for growth.” Meanwhile demand dynamics remain favorable in key markets with INXN pricing its services below demand to expand its interconnectivity-focused datacenters.
We can see from TipRanks that this “Strong Buy” stock boasts an impressive six back-to-back buy ratings from analysts over the last three months. These analysts believe (on average) that INXN will spike 10% to hit $62 over the coming months.
George Soros Stocks to Buy: Kraft Heinz (KHC)
Source: Mike Mozart via Flickr
The Kraft Heinz Company (NASDAQ:KHC) is one of the big stock picks from Soros this year. He poured money into the food and drink powerhouse in Q1, Q2 and Q3. Indeed, in the last quarter Soros boosted the fund’s Kraft position by 48% with the purchase of 299,587 shares. Following this move Soros now has a $53.1 million position in the stock.
And Soros isn’t the only fund guru betting on KHC. Perhaps he was inspired by Warren Buffett, aka the Oracle of Omaha, who has a huge KHC position of $25.5 billion. In fact, Kraft Heinz is Berkshire Hathaway Inc.’s (NYSE:BRK.A, NYSE:BRK.B) second biggest position after Wells Fargo & Company (NYSE:WFC).
From the Street side, David Palmer is a five-star RBC Capital analyst with a bullish $94 price target on the stock. He says 2018 may be a year of accelerating top and bottom line growth for KHC, boosted by the full-year benefits of 2H17 supply chain investments. The company is also looking to repatriate key brands like Ketchup in Europe and Australia to scale up ex-U.S. growth.
Overall, KHC has a cautiously optimistic “Moderate Buy” rating from the Street. In the last three months this breaks down into five buy and three hold ratings. The $88 average analyst price target indicates 13% upside potential from the current share price.
George Soros Stocks to Buy: EQT Corporation (EQT)
Source: Maciek Lulko (Modified)
Soros revealed a very bullish sentiment on natural gas producer EQT Corporation (NYSE:EQT) over just two quarters. In Q217 he initiated a $38 million position — and then quickly snapped up a further 609,165 shares in Q3. After this 93% boost, Soros now holds $82.5 million shares of EQT. As a result, the stock is now no. 11 in the fund’s portfolio.
On Nov. 13, EQT completed its takeover of Rice Energy for roughly $8.2 billion. “With the closing of the transaction, we are combining two of the leading operators in the Appalachian Basin to create an even stronger company that is positioned to deliver greater returns to shareholders through operating efficiencies and improved overall well economics,” commented Steve Schlotterbeck, EQT’s CEP. The deal should make EQT the largest producer of natural gas in the U.S. — and could create synergies of up to $2.5 billion.
This “Strong Buy” stock has an encouraging outlook from the Street. Five analysts have published buy ratings on EQT in the last three months, versus just one hold rating. These analysts are predicting (on average) a spike of 35% from the current $57 share price over the next 12 months.
George Soros Stocks to Buy: Comcast (CMCSA)
Source: Mike Mozart via Flickr
Last quarter, Soros made a new play for mass media corporation Comcast Corporation (NASDAQ:CMCSA). He initiated a serious position in the stock of 1 million shares worth $41.7 million. And the 100% bullish outlook from the Street is also an encouraging sign for investors. In the last three months eight analysts have published buy ratings on CMCSA. Meanwhile the $44 average analyst price target indicates that the stock can rise over 16%.
Top Pivotal Research analyst Jeffrey Wlodarczak is even more confident on CMCSA than the average analyst. He sees $50 as a price target — which suggests sweet upside potential of 30%. According to Wlodarczak $35 is as low as CMCSA can go (it is currently at $38) but investors will need to be patient as Comcast ‘proves the sky is not falling out.’
The stock is cheap right now because CMCSA is currently transitioning from a focus on video/data/phone revenue to customer growth driven by high margin data. “Investors historically don’t like transitions which is partly why the cable names and Comcast have underperformed, however we believe the current Comcast valuation (7.3X 2018 EBITDA) is so low (and the risk/reward so high) that the shares are quite compelling” says Wlodarczak. He is now looking for solid financial guidance for 2018 — boosted by increasing data speeds and share taking.
George Soros Stocks to Buy: Monsanto (MON)
Last but not least we have biotech giant Monsanto Company (NYSE:MON) — one of the world’s top suppliers of farm pesticides and seeds. Throughout 2017, Soros made a number of bullish MON trades. Starting in Q1 he initiated a position — which he then increased in both Q2 and Q3. Now the fund holds 188,539 MON shares worth close to $22.6 million.
German drugs and pesticide group Bayer AG (ADR) (OTCMKTS:BAYRY) is planning a massive $66 billion takeover of Monsanto. The deal was supposed to go through in 2017, but it has been delayed by an antitrust review from the European Commission (EC). The EC will now deliver its verdict in January 2018.
However, Reuters is already reporting that EU regulators are about to warn Bayer that its proposed takeover may hurt competition. According to sources, the EU now has a charge sheet of objections to the deal — although a final decision has not yet been made. As a result Bayer could be forced to make further concessions for the deal to go through.
The Street has a more divided take on Monsanto. With a “Moderate Buy” analyst consensus rating, analysts are predicting 8% upside from the current share price.
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