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Sydnee Gatewood
Sydnee Gatewood
Articles (3504) 

The Top 5 Trades of George Soros' Firm

Guru's firm reveals 2nd-quarter portfolio

Soros Fund Management, the firm founded by renowned investor George Soros (Trades, Portfolio) in 1969, disclosed its portfolio for the second quarter earlier this month.

The New York-based hedge fund is the primary advisor for the Quantum Group of Funds. It converted to a family office in 2011, becoming closed to outside investors and avoiding regulatory changes. Soros' investing principles are based on his theory of "reflexivity," which holds that individual investor biases affect both market transactions and the economy. The chaotic financial markets and the mispricing of assets caused by this phenomenon provide value opportunities for the cautious investor.

Based on these criteria, the firm entered 55 new positions during the quarter, sold out of 31 holdings and added to or reduced a slew of other investments. The most notable trades for the three months ended June 30 included new positions in the iShares 1-3 Year Credit Bond ETF (NASDAQ:IGSB) and SelectQuote Inc. (NYSE:SLQT). Soros' firm also added to its stakes in iShares Trust (LQD) and T-Mobile US Inc. (NASDAQ:TMUS) as well as trimmed its holding of Peloton Interactive Inc. (NASDAQ:PTON).

IShares 1-3 Year Credit Bond ETF

Soros' firm invested in 2.9 million shares of the iShares 1-3 Year Credit Bond ETF, dedicating 3.96% of the equity portfolio to the stake. It traded for an average price of $53.55 per share during the quarter.

The exchange-traded fund tracks the investment results of an index composed of U.S. Treasury bonds with remaining maturities between one and three years. With a market cap of $19.7 billion, the shares were trading around $54.98 on Thursday.

The 14-day relative strength index is 64.5, indicating the security is approaching overbought levels.

Other gurus currently invested in the ETF are Steven Cohen (Trades, Portfolio), Jim Simons (Trades, Portfolio)' Renaissance Technologies and Ken Fisher (Trades, Portfolio).

SelectQuote

The firm picked up 5.55 million shares of SelectQuote, allocating 3.50% of the equity portfolio to the stake. Shares traded for an average price of $26.82 each during the quarter.

Headquartered in Overland Park, Kansas, the company facilitates an online platform for comparing and shopping for health, life, auto and home insurance. SelectQuote, which went public in May, has a $2.88 billion market cap; its shares were trading around $17.76 on Thursday with a price-earnings ratio of 29.92, a price-book ratio of 14.57 and a price-sales ratio of 5.08.

The price chart shows the stock has tumbled around 35% since its initial public offering.

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SelectQuote's financial strength and profitability were both rated 4 out of 10 by GuruFocus. In addition to adequate interest coverage, the company is supported by strong margins and returns that outperform a majority of competitors.

Of the gurus invested in the stock, Soros' firm has the largest stake with 3.43% of outstanding shares. Jerome Dodson (Trades, Portfolio), Pioneer Investments (Trades, Portfolio), Cohen and Paul Tudor Jones (Trades, Portfolio) are also shareholders.

IShares Trust

The guru's firm boosted the iShares Trust holding by 591.17%, buying 1.18 million shares. It now holds a total of 1.38 million shares, which account for 4.62% of total assets managed. The ETF traded for an average per-share price of $129.98 during the quarter.

GuruFocus estimates the firm has gained 4.1% on the investment so far.

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The ETF tracks the investment results of an index composed of U.S. dollar-denominated, investment grade corporate bonds. With a market cap of $56.09 billion, the shares were trading around $134.71 on Thursday.

The 14-day relative strength index is 41.37, indicating the security is neither overbought nor oversold.

Other gurus currently invested in the ETF are Fisher, Dodge & Cox, Paul Singer (Trades, Portfolio), Ray Dalio (Trades, Portfolio), Louis Moore Bacon (Trades, Portfolio), Cohen, Jeremy Grantham (Trades, Portfolio), Caxton Associates (Trades, Portfolio) and Simons' firm.

T-Mobile US

The stake in T-Mobile was increased by 1,087%, or 1.3 million shares. The trade had an impact of 3.45% on the equity portfolio. During the quarter, the stock traded for an average price of $95.53 per share.

Soros' firm now holds 1.45 million shares, representing 3.77% of the equity portfolio. It has gained an estimated 21.26% on the investment so far according to GuruFocus.

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The Bellevue, Washington-based telecom company has a $145.41 billion market cap; its shares were trading around $115.75 on Thursday with a price-earnings ratio of 37.79, a price-book ratio of 2.27 and a price-sales ratio of 2.16.

The Peter Lynch chart shows the stock is trading above its fair value, suggesting it is overpriced. The GuruFocus valuation rank of 1 out of 10 also supports this assessment since the share price and price-sales ratio are near 10-year highs.

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GuruFocus rated T-Mobile's financial strength 4 out of 10 on the back of poor interest coverage and a low Altman Z-Score of 1.02, which warns the company could be at risk of going bankrupt since revenue growth has slowed over the past 12 months. Its assets are also building up at a faster rate than revenue is growing, indicating it may be becoming less efficient.

The company's profitability fared much better, scoring a 7 out of 10 rating. In addition to an expanding operating margin, T-Mobile is being supported by margins that outperform around half of its industry peers and has a moderate Piotroski F-Score of 5, suggesting operations are stable. It also has a predictability rank of one out of five stars. GuruFocus says companies with this rank return an average of 1.1% annually over a 10-year period.

With 0.47% of outstanding shares, David Tepper (Trades, Portfolio) is T-Mobile's largest guru shareholder. Other top guru investors include Simons' firm, Andreas Halvorsen (Trades, Portfolio), Dodge & Cox, PRIMECAP Management (Trades, Portfolio) and Stanley Druckenmiller (Trades, Portfolio).

Peloton Interactive

Impacting the equity portfolio by -4.04%, Soros' firm curbed the Peloton Interactive position by 83%, selling 2.5 million shares. The stock traded for an average per-share price of $41.03 during the quarter.

The firm now holds 508,953 shares total, which account for 0.73% of the equity portfolio. GuruFocus says it has gained around 49.51% on the investment so far.

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Known for its interactive fitness platform and stationary bikes, the New York-based company has a market cap of $19.41 billion; its shares were trading around $68.54 on Thursday with a price-book ratio of 12.52 and a price-sales ratio of 6.55, which GuruFocus noted are near multiyear highs.

Since its IPO in September 2019, the stock has climbed over 150%.

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Peloton's financial strength was rated 6 out of 10 by GuruFocus, driven by comfortable interest coverage and a robust Altman Z-Score of 11.32, which indicates the company is in good standing.

It is also being weighed down by negative margins and returns that underperform a majority of industry peers.

Chase Coleman (Trades, Portfolio) is the Peloton's largest guru shareholder with 1.87% of outstanding shares. Other top guru investors are Philippe Laffont (Trades, Portfolio), Simons' firm, Pioneer, Bacon, Jones and Joel Greenblatt (Trades, Portfolio).

Additional trades and portfolio composition

During the quarter, Soros' firm also entered positions in The Hain Celestial Group Inc. (NASDAQ:HAIN), PG&E Corp. (NYSE:PCG), DraftKings Inc. (NASDAQ:DKNG), Otis Worldwide Corp. (NYSE:OTIS), Darden Restaurants Inc. (NYSE:DRI) and many other stocks.

The firm's $4.02 billion equity portfolio, which is composed of 110 stocks, is most heavily invested in the financial services sector with a weight of 24.56%.

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Disclosure: No positions.

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