George Soros' Top Buys in the Last Quarter
Currently Soros Fund Management has 727 stocks worth $6.42 billion as of May 2011. In 2010, Forbes listed Soros as the 35th richest person in the world, and the 14th richest person in America, with a net worth estimated at US$14.2 billion.
For Soros, reflexivity is the belief that the action of beholding the valuation of any market, by its participants, affects said valuation of the market in a "virtuous or vicious" circle. Soros began to apply his ideas on reflexivity to investing.
He explains his ideology: "My approach works not by making valid predictions but by allowing me to correct false ones… The secret to my success is that I know that I will be wrong. I consider it is strength to admit my mistakes. That allows me to stay in the game and fight another day."
His top buys in the last quarter include:
WebMD Health Corp. (WBMD) is the middleman between patients and doctors. Its consumer-focused website has a very deep set of content, helping patients learn more about what ails them and the latest thinking on what can cure them. Doctors use the company's technology platform to manage patient information and communicate with insurers, health-care facilities and all other parties in the medical field.
WebMD has become a key channel for advertisers, enabling it to grow at a fast pace. Sales rose 17% in 2008 and 2009, and another 21% in 2010, to $534 million. Gross margins in excess of 60% have also allowed it to become quite profitable. Free cash flow rose steadily during the past half decade, to $90 million in 2010.
Soros reported an ownership stake of about 3.47 million shares. The 45% drop in the stock from its 52-week high, coupled with an expectation that growth will resume again in late 2012 into 2013, is the perfect backdrop for large investors like Soros. This is because the company is very good and it has just had a bad year.
Amazon.com Inc. (AMZN) Amazon is the highest grossing online retailer in the world with $34.2 billion in net sales in 2010, or 8% of the global $415 billion e-commerce market.
Media represented 43% of sales in 2010, and electronics and general merchandise represented 54% of sales. The remaining 3% was derived from cobranded credit card agreements, fulfillment operations, and cloud computing services.
Outside the U.S., Amazon operates sites in Canada, the U.K., Germany, France, Austria, Japan, and China. International sales represent 45% of total sales.
Amazon's balance sheet is in great shape. As of June 2011, the firm had nearly $6.3 billion in cash and equivalents compared with just over $300 million in debt principal and interest obligations.
Most Internet users come from developing markets. This leaves Amazon with a tremendous global opportunity. The company sells directly in six countries outside the U.S. and Canada.
International e-commerce trends are accelerating, and growth rates should exceed the U.S. by several percentage points over the next decade. Complementary e-commerce websites (Zappos.com, Diapers.com, Soap.com), LOVEFiLM, and an investment in LivingSocial diversify Amazon and provide multiple opportunities to participate in e-commerce growth.
Amazon has leveraged its assets in creative ways, such as allowing third-party sellers to sell on Amazon.com and use its fulfillment services, licensing its platform to large merchants, and licensing its payment services.
Motorola Solutions Inc. (MMI) has two main businesses. First, at 65% of revenue, is its public safety business, which sells two-way radios and supporting infrastructure and services, primarily to government agencies. The remaining 35% of revenue comes from enterprise customers, to whom it sells hand-held scanners, tablets, RFID equipment, WLAN base stations, and similar products that allow customers to manage inventories and supply chains. Key vertical markets for this business include retail and transportation.
Motorola has reported total cash of $6.65 billion, and net of long-term debt, $4.5 billion. Motorola Solutions' balance sheet has improved.
Although Motorola Solutions has only existed as a stand-alone entity since early 2011, the business unit that became Motorola Solutions has a long track record as a reported segment from the predecessor company.
Given its history of slow, steady growth and its low capital requirements, Motorola Solutions could eventually institute a dividend once it hits specific goals for its balance sheet.
Medicines (MDCO): Medicines Company acquires, develops and commercializes biopharmaceutical products in late stages of development. Net income for the first nine months was $46.1 million or $0.87 per share compared to a net loss of 2.7 million or $0.05 per share in 2009. Non GAAP net income in the third quarter was 22.8 or $0.43 per share compared to non-GAAP net income of 5.1 million or $0.10 per share in the third quarter 2009.
The Medicines Company in 2010 received very good news when the U.S. District Court in Virginia ordered the U.S. Patent and Trademark Office to treat the company's patent term extension application for lead product Angiomax as having been filed on a timely basis. Angiomax is a specific and reversible direct thrombin inhibitor that was launched in early 2001. Despite the challenging economic scenario which has led to hospitals and patients cutting down on costly procedures, Angiomax sales in 2010 were up 7.7% year over year in the U.S.
New guidelines issued by the American College of Cardiology (ACC) and the American Heart Association (AHA) recommend that Angiomax should be administered as one of the choices for anticoagulant therapy in patients with UA and nSTEMI who are selected to receive an invasive surgery.
Least but not last, Medicines is actively pursuing acquisitions and in-licensing agreements to grow its pipeline.
InterOil Corporation (IOC): InterOil Corporation is engaged in the exploration, appraisal, and development of crude oil and natural gas properties primarily in Papua New Guinea. The company is also engaged in the distribution of refined products under its branded name InterOil Products Limited; and in the refining and liquefaction of jet fuel, diesel and gasoline, naphtha and low sulfur waxy residue. InterOil Corporation is based in Cairns, Australia.
The company is considering a stock buy-back program. Furthermore, the company is expecting to close one or two takeoff deals that will help it to improve.