In this article, we examined legendary investor George Soros’ investment strategy and his historical performance. We also reviewed the 10 best stocks to buy according to George Soros. You can skip our detailed discussion and jump on directly to 5 Best Stocks to Buy According to George Soros.
The legendary billionaire investor George Soros, 90, is one of the most successful investors of all time. Soros earned fame as ‘the man who broke the Bank of England’ amid his famous bet against the British Pound in 1992, which also helped him in making $1 billion in profits in a single day. George Soros, who is sitting on a net worth of $8.6 billion, likes to invest when others are reluctant. Soros Fund Management, which is now closed for outside investors and operating as a family office fund, posted 23% returns during the pandemic year, thanks to his bets on high growth stocks from consumer discretionary, information technology, and communication sectors.
His hedge fund, however, doesn’t like to hold positions for the long-term, as the average time held for the top 20 positions is around 2.50 quarters. At the beginning of the pandemic year, he snapped up positions in information technology, finance, and consumer discretionary stocks. Information technology stocks like Amazon.com, Inc. (NASDAQ:AMZN), Alphabet Inc. (NASDAQ:GOOGL), IHS Markit Ltd. (NASDAQ:INFO), Activision Blizzard, Inc. (NASDAQ:ATVI), and Marqeta, Inc. (NASDAQ:MQ) are among the 10 best stocks to buy according to George Soros.
In Amazon.com, Inc. (NASDAQ:AMZN), Soros’ fund increased its hold by 38% in the second quarter when compared to the first quarter, while the fund’s stake in Alphabet Inc. (NASDAQ:GOOGL) increased by 2% to over $171 million at the end of the June quarter.
Born in Hungary and studied at the London School of Economics, George Soros’ strategy of sticking to growth stocks worked for his fund once again in 2021. Following underperformance in the first quarter, the S&P 500 information technology index soared close to 21% this year, with expectations of a strong rally in the rest of 2021, thanks to the Federal Reserve’s policies combined with the sector’s strong fundamentals. Stocks from the information technology sector represented 12.50% of the $5.9 billion worth of Soros Fund Management’s 13F portfolio, according to the latest filings.
Meanwhile, consumer discretionary and communication sectors, which are the home of many growth stocks, accounted for 23% and 19% of the overall portfolio. The consumer discretionary sector soared 13% year to date and the communication sector jumped close to 30% during the same time.
George Soros of Soros Fund Management
Why should we pay attention to George Soros’ stock picks? Insider Monkey’s research was able to identify in advance a select group of hedge fund holdings that outperformed the S&P 500 ETFs by more than 86 percentage points since March 2017. Between March 2017 and July 2021 our monthly newsletter’s stock picks returned 186.1%, vs. 100.1% for the SPY. Our stock picks outperformed the market by 86 percentage points (see the details here). That’s why we believe hedge fund sentiment is an extremely useful indicator that investors should pay attention to. You can subscribe to our free newsletter on our homepage to receive our stories in your inbox.
Let’s start our list of the 10 best stocks to buy according to George Soros. We analyzed Soros’ fund’s second quarter holdings for this article.
10 Best Stocks to Buy According to George Soros
10. PPD, Inc. (NASDAQ:PPD)
Number of hedge fund holders: 49
Soros Fund Management snapped up 2.1 million shares of the drug manufacturer PPD, Inc. (NASDAQ:PPD) during the second quarter, accounting for 1.62% of the overall portfolio. Shares of PPD, Inc. (NASDAQ:PPD) gained as Thermo Fisher said it plans to buy the company for about $17 billion.
In its Q2 2021 investor letter, DEVON Equity Management mentioned PPD, Inc. (NASDAQ:PPD), and discussed its stance on the firm. Here is what DEVON Equity Management stated about PPD, Inc. (NASDAQ:PPD):
“…We expect the ~US$4bn of ‘excess’ free cash flow generated from COVID related business to be reinvested into high returning businesses with a more sustainable earnings profile. This is already evident in Thermo’s strong M&A activity YTD, culminating in the US$20bn acquisition of PPD (PPD US).
PPD is a top tier CRO (Contract Research Organisation) which has been in and out of private equity ownership in recent times. To oversimplify, CRO’s effectively provide ‘outsourced’ R&D services across the entire customer spectrum (from big pharma to early stage biotech). Their value proposition varies slightly be customer, but ultimately comes down to quality of drug discovery / development and accelerating time to market (i.e. ‘Return on R&D investment’). CROs must stack up well on this metric vs in-house R&D spend, otherwise Firms would simply keep the spend 100% internal.”
9. Marqeta, Inc. (NASDAQ:MQ)
Number of hedge fund holders: 35
The information technology services company Marqeta, Inc. (NASDAQ:MQ) is ranked at the ninth spot in the list of 10 best stocks to buy according to George Soros. His family office fund initiated a position in Marqeta, Inc. (NASDAQ:MQ) during the second quarter by purchasing 4 million shares. Marqeta, Inc. (NASDAQ:MQ) stock holding represents 1.89% of the overall Soros’ portfolio at the end of the second quarter.
In the Q2 2021 investor letter of Baron Funds, the fund mentioned Marqeta, Inc. (NASDAQ:MQ) and discussed its stance on the firm. Here is what Baron Funds stated about Marqeta, Inc. (NASDAQ:MQ):
“We participated in the IPO of Marqeta, Inc., a modern card-issuing platform that enables companies to run their own payment card programs. Marqeta is built on modern technology and can be accessed with open APIs that are easy to use and developer-friendly, resulting in most of its clients coming from word-of-mouth referrals instead of outbound sales. The modern technology stack allows for the programmability of cards, enabling companies to authorize transactions in real time and control how the cards are used. This programmable nature means that cards can be used in a range of use cases for which traditional cards are not suitable. Examples include cards with spending controls for different employees and purchase categories as well as cards for food delivery companies that restrict spending only to authorized purchases to reduce fraud. While there are other card issuers, none can provide the level of functionality at large scale that Marqeta can. Marqeta generates revenue from the interchange fees earned on transactions that are processed on its cards. It shares a portion of this with its customers, meaning that card solutions become a revenue stream rather than a cost center. Many of the company’s clients are fast growing, and Marqeta continues to innovate the features on its platform, which in turn give its clients more tools with which to develop new card payment products and experiences. Given a largely fixed cost structure, Marqeta earns high incremental margins on each dollar spent on its cards. Led by founder-CEO Jason Gardner, we believe that Marqeta is a high-quality, differentiated business in the FinTech space with a long runway for growth.”
8. Proterra Inc. (NASDAQ:PTRA)
Number of hedge fund holders: 23
Shares of Proterra Inc. (NASDAQ:PTRA), which is ranked eighth in the list of 10 best stocks to buy according to George Soros, have been under pressure since its debut on NASDAQ a couple of months ago. Soros Fund Management also initiated a position in Proterra Inc. (NASDAQ:PTRA) by buying $132 million worth of shares, according to the latest filings.
Proterra Inc. (NASDAQ:PTRA) generated $58.5 million in the second-quarter revenue and its gross margin was positive for the sixth quarter in a row.
7. Activision Blizzard, Inc. (NASDAQ:ATVI)
Number of hedge fund holders: 78
Soros Fund Management first initiated a position in Activision Blizzard, Inc. (NASDAQ:ATVI) at the end of 2019. During the second quarter of 2021, the firm lifted its existing position in Activision Blizzard, Inc. (NASDAQ:ATVI) by 3% to 1.50 million shares, accounting for 2.42% of the overall portfolio. Activision Blizzard, Inc.’s (NASDAQ:ATVI) share price has been under pressure this year.
However, Morgan Stanley looks bullish over Activision Blizzard, Inc. (NASDAQ:ATVI) share price fundamentals. The firm added it to their top ideas list, saying they’re “aggressive buyers” pursuing at least 45% upside.
Like Amazon.com, Inc. (NASDAQ:AMZN), Alphabet Inc. (NASDAQ:GOOGL) and IHS Markit Ltd. (NYSE:INFO), Activision Blizzard, Inc. (NASDAQ:ATVI) is among the 10 best stocks to buy according to George Soros.
Activision Blizzard, Inc. (NASDAQ:ATVI) shareholders have witnessed an increase in support from the world’s most elite money managers lately. Activision Blizzard, Inc. (NASDAQ:ATVI) was in 78 hedge funds’ portfolios at the end of the second quarter of 2021 compared to 76 positions in the prior quarter.
6. IHS Markit Ltd. (NYSE:INFO)
Number of hedge fund holders: 61
The information technology company IHS Markit Ltd. (NYSE:INFO) has been one of the best performers in the list of the 10 best stocks to buy. IHS Markit Ltd. (NYSE:INFO) share price is up 34% year to date.
During the second quarter, Soros Fund Management initiated a brand new position in IHS Markit Ltd. (NYSE:INFO) by purchasing 1.35 million shares, representing 2.56% of the overall portfolio. S&P Global (NYSE:SPGI)’s $48 billion merger with IHS Markit Ltd. (NYSE:INFO) is expected to close in the fourth quarter.
Like Amazon.com, Inc. (NASDAQ:AMZN), Alphabet Inc. (NASDAQ:GOOGL) and Activision Blizzard, Inc. (NASDAQ:ATVI), IHS Markit Ltd. (NYSE:INFO) is among the 10 best stocks to buy according to George Soros.
Click to continue reading and see the 5 Best Stocks to Buy According to George Soros.
Disclosure: None. 10 Best Stocks to Buy According to George Soros is originally published on Insider Monkey.