Soros Fund Management, the firm founded by George Soros (Trades, Portfolio), disclosed in a regulatory portfolio update filing that its top buys during the fourth quarter of 2022 included new positions in Horizon Therapeutics PLC (HZNP, Financial), First Horizon Corp. (FHN, Financial), Altra Industrial Motion Corp. (AIMC, Financial), Signify Health Inc. (SGFY, Financial) and the iShares iBoxx USD Investment Grade Corporate Bond ETF (LQD, Financial).
Soros focuses on a theory of reflexivity, which is based on the premise that individual bias can affect market transactions and the economy. The Hungarian-American guru believes that the prices of securities depend on trading activity and that traders usually buy or sell based on emotional reactions instead of logical calculations. Opportunities can be found by studying the market prices of assets.
As of December 2022, Soros’ $4.38-billion 13F equity portfolio contains 160 stocks, with 27 new positions and a quarterly turnover ratio of 32%. The top-four sectors in terms of weight are consumer cyclical, technology, financial services and communication services, with weights of 14.43%, 13.38%, 13.33% and 10.17%.
Investors should be aware13F filings do not give a complete picture of a firm’s holdings as the reports only include its positions in U.S. stocks and American depository receipts, but they can still provide valuable information. Further, the reports only reflect trades and holdings as of the most-recent portfolio filing date, which may or may not be held by the reporting firm today or even when this article was published.
Horizon Therapeutics PLC
Soros purchased 2,858,501 shares of Horizon Therapeutics PLC (HZNP, Financial), giving the position a 7.42% equity portfolio weight. Shares averaged $83.06 during the fourth quarter; the stock is modestly undervalued based on its price-to-GF-Value ratio of 0.87 as of Tuesday.
The Dublin, Ireland-based drug manufacturer has a GF Score of 78 out of 100 based on a rank of 7 out of 10 for growth, financial strength and GF Value, a profitability rank of 6 out of 10 and a momentum rank of 3 out of 10.
Horizon Therapeutics’ financial strength ranks 7 out of 10 on several positive investing signs, which include a high Altman Z-score of 4.85 and a Beneish M-score that suggests little or no earnings manipulation.
Other gurus with holdings in Horizon Therapeutics include John Paulson (Trades, Portfolio)’s Paulson & Co. and Steven Cohen (Trades, Portfolio)’s Point72 Asset Management.
First Horizon
Soros purchased 8,535,983 shares of First Horizon (FHN, Financial), giving the position 4.77% equity portfolio weight.
Shares of First Horizon averaged $24.23 during the fourth quarter; the stock is significantly overvalued based on its price-to-GF-Value ratio of 1.49 as of Tuesday.
The Memphis, Tennessee-based regional bank has a GF Score of 55 out of 100 based on a momentum rank of 6 out of 10, a profitability rank of 5 out of 10, a financial strength rank of 3 out of 10, a growth rank of 2 out of 10 and a GF Value rank of 1 out of 10.
Other gurus with holdings in First Horizon include Jeremy Grantham (Trades, Portfolio)’s GMO and Mario Gabelli (Trades, Portfolio)’s GAMCO Investors.
Altria Motion
The firm invested in 2,000,001 shares of Altira Motion (AIMC, Financial), giving the position 2.73% equity portfolio weight. Shares averaged $52.52 during the fourth quarter; the stock is significantly overvalued based on its price-to-GF-Value ratio of 1.41 as of Tuesday.
The Braintree, Massachusetts-based motion control supplies company has a GF Score of 68 out of 100 based on a profitability rank of 7 out of 10, a momentum rank of 6 out of 10, a GF Value rank of 1 out of 10 and a rank of 5 out of 10 for financial strength and growth.
Altria Motion’s profitability ranks 7 out of 10 on the back of operating margins increasing by approximately 9.5% per year on average over the past five years and outperforming approximately 78% of global competitors. Despite this, the company’s net profit margins and returns on equity underperform more than 75% of global industrial companies.
Signify Health
The firm purchased 2,825,466 shares of Signify Health (SGFY, Financial), giving the position 1.85% equity portfolio weight. Shares averaged $28.86 during the fourth quarter.
The Norwalk, Connecticut-based company creates value-based payment programs using advanced analytics and health care provider networks. For the year ending December 2021, the company reported $773.4 million in revenue, of which 84.4% of the revenue came from the company’s home and community services business segment.
Signify Health’s financial strength ranks 5 out of 10 on the back of cash-to-debt and debt-to-equity ratios underperforming more than 58% of global competitors despite the company having a high Altman Z-score of 3.67.
The company’s profitability ranks 3 out of 10 on the back of gross profit margins underperforming more than half of global health care companies.
Despite low scores for profitability and financial strength, the stock does not have enough data to compute a rank for growth, GF Value and momentum and thus, Signify Health’s GF Score of 23 out of 100 may give an incomplete picture of the stock’s potential.
iShares iBoxx USD Investment Grade Corporate Bond ETF
The firm purchased 2,418,200 shares of the iShares iBoxx USD Investment Grade Corporate Bond ETF (LQD, Financial), giving the position 5.82% equity portfolio weight. Shares averaged $103.77 during the fourth quarter.
According to the iShares website, the iShares iBoxx USD Investment Grade Corporate Bond ETF seeks to track the results of an index composed of U.S.-dollar denominated investment grade corporate bonds.
