(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, Financial), Wal-Mart Stores Inc.(WMT, Financial), Lowe's Companies Inc.(LOW, Financial), The Home Depot Inc. (HD, Financial), NRG Energy Inc (NRG, Financial)
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.
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, Financial), Wal-Mart Stores Inc.(WMT, Financial), Lowe's Companies Inc.(LOW, Financial), The Home Depot Inc. (HD, Financial), NRG Energy Inc (NRG, Financial)
| 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.
