Soros Fund Management, the firm founded by legendary guru George Soros (Trades, Portfolio), disclosed last week its top five buys for the third quarter were Peloton Interactive Inc. (PTON, Financial), Alcon Inc. (ALC, Financial), Ally Financial Inc. (ALLY, Financial), Owl Rock Capital Corp. (ORCC, Financial) and Cabot Oil & Gas Corp. (COG, Financial).
Soros’ firm invests based on the belief that markets are chaotic and that security prices depend on the individuals that buy and sell stocks, bonds and currencies. The theory of reflexivity hinges on the premise that individual investor biases affect market transactions and the economy.
Soros converted Soros Fund Management into a family office in 2011. As of third quarter-end, the $2.93 billion equity portfolio contains 127 stocks, of which 27 represent new positions. The fund’s top four sectors in terms of weight are communication services, real estate, financial services and consumer cyclical, with weights of 28.34%, 16.17%, 16.10% and 11.22%.
Peloton
The firm purchased 1.575 million shares of Peloton, giving the stake 1.35% weight in the equity portfolio. Shares averaged $25.37 during the quarter.
Known for products like the Peloton Bike and Peloton Tread, the New York-based fitness equipment company has over 1.6 million members as of the end of the third quarter. Peloton is a pioneer in connected, technology-enabled fitness and the streaming of immersive, instructor-led boutique classes to its members.
Revenue for the three months ended Sept. 30 were $228 million, up from the prior-year quarter revenue of $112.1 million. Connected fitness product revenue increased $79.7 million year over year on the heels of strong growth of product deliveries, while Subscription revenue increased $35.4 million year over year on the heels of strong growth and retention of members.
Alcon
The firm purchased 532,340 shares of Alcon, giving the position 1.06% weight in the equity portfolio. Shares averaged $60.05 during the quarter.
The Geneva, Switzerland-based medical company develops eye care products, allowing the world to “see brilliantly” according to its website. The company said this week that worldwide sales for the September quarter were $1.8 billion, up 4% year over year, driven by sales growth in Alcon’s four key growth platforms within its business segments. Surgical net sales increased 6% on the heels of strong demand for PanOptix, while Vision Care sales increased 3%, driven by innovation.
Other gurus with holdings in Alcon include PRIMECAP Management (Trades, Portfolio), Pioneer Investments (Trades, Portfolio) and the Vanguard Health Care Fund (Trades, Portfolio).
Ally Financial
The firm purchased 655,953 shares of Ally Financial, giving the holding 0.74% weight in the equity portfolio. Shares averaged $32.37 during the quarter.
Ally Financial offers diversified financial services as both a financial holding company and a bank holding company. According to GuruFocus, the Detroit-based credit services provider has an equity-to-asset ratio that underperforms 92.13% of global competitors and a cash-to-debt ratio that underperforms 65.19% of global peers, suggesting low financial strength.
Other gurus with holdings in Ally Financial include Bill Nygren (Trades, Portfolio)’s Oakmark Capital and Howard Marks (Trades, Portfolio)’ Oaktree Capital.
Owl Rock
The firm purchased 1,373,713 shares of Owl Rock, giving the stake 0.74% weight in the equity portfolio. Shares averaged $16.02 during the quarter.
The New York-based company reported on Oct. 31 that net investment income for the quarter was $137.9 million. Investment income of $188.1 million increased from the prior-year quarter income of $176.1 million on the heels of investment portfolio gains.
Cabot
The firm invested in 1 million shares of Cabot, giving the position 0.60% weight in the equity portfolio. Shares averaged $19.21 during the quarter.
The Houston-based company explores and produces oil and natural gas in the Appalachia region. According to GuruFocus, Cabot’s profit margins and returns are outperforming over 93% of global competitors, suggesting good profitability potential. Additionally, Cabot has a strong Piotroski F-score of 7.
Disclosure: No positions.
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