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ovenerio
ovenerio
Articles (1601) 

Billionaire George Soros Ups Two Stakes in First Quarter

Soros Fund Management, an investment management firm currently structured as a family office, but was formerly a hedge fund is managed by billionaire and philanthropist George Soros (Trades, Portfolio). Soros is a guru who needs no introduction, but let´s analyze his recently filed portfolio.

Hedge funds have been filing their form 13-F, which is a quarterly report of equity holdings filed by institutional investment managers with at least $100 million in equity assets under management, as required by the United States Securities and Exchange Commission (SEC).

Soros Fund Management disclosed an equity portfolio valued at about $10.1 billion as of the end of the first quarter of 2015. With a highly diversified portfolio worth more than $10.1 billion, the equity portfolio is mainly invested in Technology (26%), Finance (20%) and Health Care (13%) stocks.

In this article, let´s concentrate in George Soros (Trades, Portfolio)' latest 13F filing. I'll look into two companies that Mr. Soros has increased the stake over the first quarter.

eBay Inc

eBay Inc. (NASDAQ:EBAY) is a $72.91 billion market cap company that saw an increase in several hedge funds over the last reported quarter. George Soros (Trades, Portfolio)' Soros Fund Management is included in this list; the fund more than doubled its exposure, to 3.32 million shares, worth more than $191.92 million according to the 13F filing. 

What's going on at eBay that makes it so attractive for Mr. Soros? Well, eBay holds very good-looking growth prospects for the upcoming future. Further, PayPal's potential to attract new customers makes me bullish on this stock. Paypal makes a huge contribution into eBay´s revenues, contributing 44% in 2014. In a scenario of increasing payment methods, I believe Paypal could achieve a high portion of the market.

In addition, return on equity is another key reason to considering eBay as an investment choice. The stock´s ROE of 15.32% doubles the industry average. This, coupled with revenue and operating margins growth make it an attractive option for sure.

Year

Revenue Growth (%)

Operating Margin (%)

Dec 05

3.27

31.67

Dec 06

4.19

23.84

Dec 07

5.58

7.99

Dec 08

6.51

24.3

Dec 09

6.69

16.69

Dec 10

6.9

22.43

Dec 11

8.87

20.37

Dec 12

10.72

20.52

Dec 13

12.22

21.01

Dec 14

14.19

19.63

We can calculate operating margin as operating income divided by its revenue. Taking the company's operating income for the first quarter and its revenue for the same period, eBay's operating margin for the quarter that ended in March was 16.46% ($732 / $4.448).

However, gross margin has been in decline, standing at 67.4%. The figure might raise some concerns (especially when considering that it is the minimum value in the last decade).

eBay has a 25.3 P/E, which stands at a premium compared to the industry mean which indicates that other companies operating in the same sub-industry are less richly valued. Some of its major competitors include Google Inc. (NASDAQ:GOOG) and Overstock.com Inc. (NASDAQ:OSTK). The following table compares the current valuations:

Ticker

Company

P/E Ratio

EBAY

eBay

25.3

GOOG

Google

25.2

OSTK

Overstock.com

70.06

Juno Therapeutics

The other company that saw a big increase in Soros' position is Juno Therapeutics Inc. (NASDAQ:JUNO). The $5.43 billion market cap biopharmaceutical company engages in developing cell-based cancer immunotherapies. Over the last reported quarter, Soros Fund Management upped its stake in the company by 314% to approximately 105.500 shares, valued at $6.4 million.

Although the company's competitors includes giants such as Novartis AG (NYSE:NVS), GlaxoSmithKline (NYSE:GSK) and Pfizer (NYSE:PFE), Juno Therapeutics stands to benefit from its no debt. This free-debt company has good cash and it is likely to outperform in an economic slowdown.

Juno Therapeutics last price of $60.09 is down 11.7% from its high of the year $68.03 from June 5. In my opinion, that creates an opportunity to initiate an investment at a cheap price.

About the author:

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

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