Soros Fund Management LLC manager George Soros (Trades, Portfolio) disclosed on Tuesday that his six top buys for the second quarter were Spotify Technology SA (SPOT, Financial), AT&T Inc. (T, Financial), Pandora Media Inc. (P, Financial), Coupa Software Inc. (COUP, Financial), Facebook Inc. (FB, Financial) and Devon Energy Corp. (DVN, Financial).
Managing a portfolio of 182 stocks, Soros invests using a theory of “reflexivity,” which is based on the premise that individual investor biases affect market transactions and the economy. The guru’s largest sectors in terms of portfolio weight include financial services, telecommunication services and information technology.
Spotify
Soros invested in 728,700 shares of Spotify for an average price of $159.94 per share. The guru dedicated 2.17% of his equity portfolio to the position.
Sweden-based Spotify announced on July 26 that the company had 180 million monthly active users for the June quarter, up 30% year over year, driven primarily by growth in Latin America and other emerging regions. The company also increased its premium subscriber base to 83 million, up 40%.
GuruFocus ranks Spotify’s financial strength 7 out of 10 on several factors, including low financial leverage and a strong Altman Z-score of 6.80.
Soros has the second-largest holding among gurus. Chase Coleman (Trades, Portfolio)’s Tiger Global Management has the largest stake with 12,802,361 shares.
AT&T
Soros disclosed a 2 million-share stake in AT&T, the company that acquired Time Warner in June. Shares of AT&T averaged $33.25 during the quarter.
GuruFocus ranks AT&T’s profitability 6 out of 10 and lists five positive investing signs, including expanding operating margins and a dividend yield near a five-year high. The Dallas-based company’s operating margin has expanded approximately 2.8% per year over the past five years and is outperforming 63% of global competitors.
Baupost Group manager Seth Klarman (Trades, Portfolio) disclosed a 9,480,700-share stake in AT&T in his second-quarter portfolio report.
Pandora
Soros invested in 7,123,275 shares of Pandora for an average price of $6.67 per share. The guru increased his equity portfolio 0.99% with this transaction.
Pandora, a radio broadcasting company, offers music streaming and automated music retention services. The Oakland, California-based company said on July 31 that revenues for the quarter increased 12% year over year on strong subscription revenues. The company’s three-year revenue growth rate of 10.3% outperforms 75% of global competitors.
Coupa Software
Soros invested in 500,000 shares of Coupa Software for an average price of $53.18 per share. With this transaction, the guru increased his equity portfolio 0.55%.
Coupa Software offers spend management solutions through the software-as-a-service business model. Although the company’s financial strength ranks a solid 6 out of 10, Coupa has four medium warning signs, including declining revenues and a price-sales ratio near a two-year high.
Soros invested in 159,200 shares of Facebook for an average price of $180.53 per share. The guru increased his portfolio 0.55% with this transaction.
Even though the company’s share price tanked on weak revenue and monthly average user guidance for the remainder of the year, Facebook’s financial strength and profitability still rank 9 out of 10 on several positive investing signs: no long-term debt, expanding operating margins, a strong Piotroski F-score of 7 and a price-sales ratio near a five-year low.
Stanley Druckenmiller (Trades, Portfolio), Jana Partners (Trades, Portfolio) and Alan Fournier (Trades, Portfolio) also established positions in Facebook during the quarter.
Devon Energy
Soros invested in 700,000 shares of Devon Energy for an average price of $38.70 per share. With this transaction, the guru increased his equity portfolio 0.54%.
The Oklahoma City-based company engages in the exploration, development and production of oil and natural gas. GuruFocus ranks Devon Energy’s profitability 5 out of 10: although the company has a strong Piotroski F-score of 7, its three-year revenue growth rate is near a 10-year low of -17.80% despite outperforming 52% of global competitors.
Disclosure: No positions.
