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George Soros Reveals His Largest Stake

July 23, 2014 | About:

Hedge funds filled their form 13-F, which is a quarterly report of equity holdings by filed institutional investment managers with at least $100 million in equity assets under management, as required by the United States Securities and Exchange Commission (SEC). In this article, let´s concentrate in one particular hedge fund and try to see the principal holdings in its portfolio. I will look into Soros Fund Management LLC.

The fund reported its equity portfolio, as at the end of March. The total value of the portfolio amounted to $9.3 billion, up from $8.8 billion disclosed at the end of the previous quarter. Consequently, the fund's total return was 6.4% in the last quarter. The filing revealed that at the end of June, the fund added 150 new positions to its equity portfolio and sold out 65 positions. The top ten portfolio holdings as of the end of the quarter represented 25.62%. The largest changes from previous 13-F´s fillings are in the health care and financial sectors.

In this article, let´s see Teva Pharmaceutical Industries Limited (NYSE:TEVA) in which the fund holds the largest stake in terms of market value. The fund disclosed a $544.8 million stake with over 10.31 million shares.

Drivers of Profitability

A $2 billion cost-saving plan as well as the company’s remaining $4 billion branded drug portfolio will continue to support the firm's profitability.

Further, Teva focuses on innovation; it has numerous innovative drug products in development. Although we know it is very difficult to develop another key product such as Copaxone, maybe these new innovative drugs can lower the huge dependence on it. Copaxone has become the world's leading MS treatment and contributes nearly to half the operating profit.

Growth Opportunities

The company is the largest pharmaceutical manufacturer with vertically integrated operations. In emerging markets, it has the scale and resources to help minimize the threat of low-cost producers. It has access and complex manufacturing capabilities, including respiratory and biosimilar drugs, that should help maintain the long-term growth opportunities on those markets. Talking about growing opportunities, the joint venture with Procter & Gamble (NYSE:PG) in branded over-the-counter drugs also creates a space for growth.

Acquisition of Labrys

A few days ago, Teva announced the acquisition of Labrys which brings to Teva LBR-101, a fully humanized monoclonal antibody that binds to calcitonin gene-related peptide, which is currently in Phase IIb clinical trials for prevention of chronic and episodic migraine.

Cash to Investors

A company characteristic is that demonstrate its commitment to return cash to investor in the form of dividends. The Board of Directors, at its meeting on April 29, 2014, declared a cash dividend for the first quarter of 2014 of NIS 1.21 per share (approximately 30 cents according to the actual rate of exchange). The current dividend yield is 2.1%, which is considered good to protect the purchasing power.

Return on Equity

Now, let´s compare the best measure of performance for a firm's management: the return on equity. The ROE is useful for comparing the profitability of a company to that of other firms in the same industry.



ROE (%)


Teva Pharmaceutical



Actavis PLC






Allergan Inc.



Industry Mean


The company has a current ratio of 5.62% which is higher than the one exhibit by Actavis PLC (NYSE:ACT), but below the Sanofi´s ROE and industry mean. In general, analysts consider ROE ratios in the 15-20% range as representing attractive levels for investment, so the ROE of Allergan Inc. (NYSE:AGN) looks very attractive. It is very important to understand this metric before investing and it is important to look at the trend in ROE over time.


Relative Valuation

In terms of valuation, the stock sells at a trailing P/E of 33.7x, trading at a discount compared to an average of 40.5x for the industry. To use another metric, its price-to-book ratio of 2x indicates a discount versus the industry average of 3.2x while the price-to-sales ratio of 2.3x is below the industry average of 3.57x. These metrics indicate that the stock is relatively undervalued and seems to be an attractive investment relative to its peers.

As we can see in the next chart, the stock price has an interesting upward trend in the five-year period. The share price is more than 30 percent higher year to date, though it is up only marginally from a month ago.


Final Comment

As outlined in this article, Teva should benefit from the $2 billion cost-savings plan, its plan to expansion into key emerging markets and the development of innovative products as well as strategic acquisitions.

For these reasons, I would advise fundamental investors should consider adding this stock to their long-term portfolios.

Other hedge fund gurus have also been active in the company. Paul Tudor Jones (Trades, Portfolio), Jeremy Grantham (Trades, Portfolio), John Keeley (Trades, Portfolio) and Ken Heebner (Trades, Portfolio) have bought the stock in the first quarter of 2014.

Disclosure: Omar Venerio holds no position in any stocks or funds mentioned.

About the author:

Omar Venerio is capital markets, derivatives, corporate finance and financial management professor. He is passionate about the stock market and providing independent fundamental research and hedge fund and insider trading-focused investigation.

Rating: 3.0/5 (2 votes)



PMarsilio - 3 years ago    Report SPAM
Is this for June end 2014 - looks like end of 1st quater to me - please confirm - thanks.
Omar Venerio
Omar Venerio premium member - 3 years ago

Hi PMarsilio,

Yes you are right, it is for Q1.


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