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Stocks Both Buffett and Soros Hold: ConocoPhillips, Wal-Mart Stores Inc., Lowe's Companies Inc., The Home Depot Inc., NRG Energy Inc.

guruek

guruek

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(GuruFocus, July 17, 2009) Both Warren Buffett and George Soros are great investors with enviable track records, yet they belong to different camps of investing. Warren Buffett belongs to buy-and-hold camp and George Soros is more of a trader.

If 1Q09 is anything resembling a typical quarter, during the quarter, Warren Buffett purchased no new stocks while George Soros added positions in 42 stocks. For the period of 6 months ended on March 31, Buffet had buy orders on 15 stocks and Soros had purchase orders on 114 stocks. As of March 31, Buffett has 41 (domestic) stocks for Berkshire Hathaway but Soros has 92 names under his Soros Fund Management LLC. Soros is much more active when comes to trading stock.

If Charlie Munger was right by stating all investing should be value investing (for “what else it could be?”), George Soros’s “value” investing style is not very obvious. Recently I reported Soros bought substantial amount of money losing high-tech company shares in article “ After Extreme Networks Inc., George Soros is Buying Exar Corporation”, we stopped at just reporting without going one step further to analyzing why.

If Soros turns over portfolio frequently, and even for the real time picks we could not really understand why, what good it does to know what he owns at the end of each quarter? Frankly this is a question we ask ourselves here at GuruFocus. Unlike for that of Buffett, one needs to take a grain of salt with what Soros owns and should not follow what he does blindly.

However, one has to be curious, what if a stock is owned by both Buffett and Soros, maybe it worth a second look? There is no empirical evidence of following such a strategy will yield better return, but we all need a starting point. Starting with the stocks owned by both Gurus is as good as any.

Ideally, since Buffett sees lasting value in this stocks, and Soros sees trading opportunity in this stocks, one gets the best of the two worlds. In practice, because of the time since the last portfolio update, one needs to be careful in committing money.



As of March 31, 2009, these are stocks held by both Buffett and Soros: ConocoPhillips (COP), Wal-Mart Stores Inc.(WMT), Lowe's Companies Inc.(LOW), The Home Depot Inc. (HD), NRG Energy Inc (NRG)

Symbol Price Guru Buying 1Q09 Guru Selling 1Q09 Combined Weightings (%) P/E Yield (%) Market Cap ($Mil)
COP$42.37 Soros Buffett 11.95 4.9 4.4 62773.4
WMT$48.51 Soros 5.54 14.1 2.3 189025
LOW$20.1 Soros 3.39 14.3 1.8 29678.2
HD$24.4 Soros 3.14 14.3 3.7 41562.9
NRG$24.72 Soros 0.59 8.1 6556.5


1. ConocoPhillips (COP)

COP is a major international integrated energy company with operations in some 49 countries. ConocoPhillips has a market cap of $62.77 billion; its shares were traded at around $42.37 with a P/E ratio of 4.9 and P/S ratio of 0.2. The dividend yield of ConocoPhillips stocks is 4.4%. ConocoPhillips had an annual average earning growth of 19% over the past 10 years.

This is the stock, of course, Buffett admitted he made a mistake on in his 2008 Letter to Berkshire Hathaway Shareholders. Buffett has since reduced ownership in the stock from the peak of about 80 million shares. He still owns 71,228,096 shares as of 03/31/2009, which accounts for 6.82% of the $40.87 billion portfolio of Berkshire Hathaway.

George Soros owns 4,135,850 shares as of 03/31/2009, an increase of 20.81% from the previous quarter. This position accounts for 5.13% of the $3.16 billion portfolio of Soros Fund Management LLC.

COP is the case in which the two Gurus diverge.

2. Wal-Mart Stores Inc.(WMT)

Wal-Mart Stores Inc. is the world's largest retailer. WalMart Stores Inc. has a market cap of $189.03 billion; its shares were traded at around $48.51 with a P/E ratio of 14.1 and P/S ratio of 0.5. The dividend yield of WalMart Stores Inc. stocks is 2.3%. WalMart Stores Inc. had an annual average earning growth of 13.3% over the past 10 years. GuruFocus rated WalMart Stores Inc. the business predictability rank of 5-star.

Warren Buffett owns 19,944,300 shares as of 03/31/2009, which accounts for 2.54% of the $40.87 billion portfolio of Berkshire Hathaway.

George Soros owns 1,817,589 shares as of 03/31/2009, an increase of 286.72% from the previous quarter. This position accounts for 3% of the $3.16 billion portfolio of Soros Fund Management LLC.

We do not know how long will Soros hold WMT. We do know however, this is a case Soros follows Buffett in investing money. As we will see, it is not the only one.

3. Lowe's Companies Inc. (LOW)

LOW is a retailer of home improvement products in the world with specific emphasis on retail do-it-yourself and commercial business customers. Lowe's Companies Inc. has a market cap of $29.68 billion; its shares were traded at around $20.1 with a P/E ratio of 14.3 and P/S ratio of 0.6. The dividend yield of Lowe's Companies Inc. stocks is 1.8%. Lowe's Companies Inc. had an annual average earning growth of 21.4% over the past 10 years. GuruFocus rated Lowe's Companies Inc. the business predictability rank of 5-star.

Warren Buffett owns 6,500,000 shares as of 03/31/2009, which accounts for 0.29% of the $40.87 billion portfolio of Berkshire Hathaway.

George Soros owns 5,362,000 shares as of 03/31/2009, an increase of 387.9% from the previous quarter. This position accounts for 3.1% of the $3.16 billion portfolio of Soros Fund Management LLC.

4. The Home Depot Inc. (HD)

HD is the one of world's largest home improvement retailer. The Home Depot Inc. has a market cap of $41.56 billion; its shares were traded at around $24.4 with a P/E ratio of 14.3 and P/S ratio of 0.6. The dividend yield of The Home Depot Inc. stocks is 3.7%. The Home Depot Inc. had an annual average earning growth of 19.5% over the past 10 years. GuruFocus rated The Home Depot Inc. the business predictability rank of 5-star.

Warren Buffett owns 3,700,000 shares as of 03/31/2009, which accounts for 0.21% of the $40.87 billion portfolio of Berkshire Hathaway.

George Soros owns 3,928,500 shares as of 03/31/2009, an increase of 279.2% from the previous quarter.

In the cases for LOW and HD, Buffett held his position steady and Soros increased his position. Perhaps Soros is doing what some of us do, he happened to think retailers are in a rebound, so he conveniently bought some stocks that Buffett owns.

5. NRG Energy Inc (NRG)

NRG owns and operates a diverse portfolio of power-generating facilities primarily in the United States. NRG Energy Inc. has a market cap of $6.56 billion; its shares were traded at around $24.72 with a P/E ratio of 8.1 and P/S ratio of 0.9. NRG Energy Inc. had an annual average earning growth of 25.9% over the past 5 years.

Warren Buffett owns 7,200,000 shares as of 03/31/2009, which accounts for 0.31% of the $40.87 billion portfolio of Berkshire Hathaway.

George Soros bought 510,823 shares in the quarter that ended on 03/31/2009, which is 0.28% of the $3.16 billion portfolio of Soros Fund Management LLC.

Conclusion

Soros and Buffett share ideas in five stocks. It will be a stretch to say Soros piggyback Buffett when coming to select stocks, however, for the rest of us, it doesn’t hurt to get your idea confirmed by not one, but both greatest investors of our times.

Notice that three of the five stocks (WMT, LOW, and HD) are rated by GuruFocus as Highly Predictable Companies, companies demonstrated to have delivered superior return with less risk. See GuruFocus Research article for details.

GuruFocus has started publishing a news letter based on our Buffett-Munger stock screener. Starting from June 2009, each month, we screens, research and recommend on two stocks. The newsletter is available through this link. The news letter is free for the Premium Members.

Rating: 3.7/5 (72 votes)

Comments

Max7777
Max7777 premium member - 5 years ago
There is a good book out there comparing Soros and Buffett titled: The Winning Investment Habits of Warren Buffett & George Soros, I think the author comes up with 23 habits for each. And interestingly he finds they both hold many of the same habbits or checklists wile totaly different in their approach to investing.

Both focus more on not losing money than making profits, They have different ways of doing that, but both constantly evaluate risk and try to reduce it.

Soros lets the market tell him if his idea is right, if it goes against him he reevaluates the situation. Buffett disregards the market price today

Both have very concentrated portfolios. both shy away from diversification so they can beat the index by as much as they have.

it requires too much time to truly know enough on 100's of securities. both believe that risk comes from now knowing what you're doing and diversification therefore adds to the risk rather than reduce it.

Neither Buffett nor Boros believes in the efficient-market hypothesis, or they would be doing something else.

Both look at fundamentals and future industry trends.

Both agree that when you can not find a situation that meet your criteria, do not invest, keep looking until you find one.

But the above stock list is not of much use, since ultimately both strongly believe your best idea is when you should put most your eggs and then watch it like a hawk. Neither Buffett nor Sorros have much in any of these stocks. Both Buffett and Soros ROI will depend on their top 5 positions as they represent more than half their respective portfolio. And they have no overlap there.


guruek
Guruek - 5 years ago
Max777, thanks for the sharing. Will check into the book.

I agree with your assessment on the list with the exception of COP. Not that I have any particular insight in the stock. It turns out, both Gurus have quite a bit skin in the game.
bearuo
Bearuo - 5 years ago
deleted

Sivaram
Sivaram - 5 years ago
Max7777,

You are way more knowledgeable on this issue but is it really true what you said about Soros being a concentrated investor? My impression, which is quite limited, was that he was more of a diversified investor. If Soros is indeed a concentrated investor, that changes my view of him.

Please leave your comment:


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