George Soros’ hedge fund is making big bets on stocks, though not nearly as big as those he made on global currencies. His biggest investment had been Splunk, a big data analytics firm. He owned 1.6 million shares worth $240 million, representing over 4.5% of the hedge fund’s total portfolio. However, Cisco just acquired the company last month (NASDAQ:CSCO). With an average buy price of around $141 per share, Soros has made a decent profit on the $157 per share acquisition price.
What follows are the next three biggest George Soros stocks held in Soros Fund Management according to the latest 13F filing with the SEC.
iShares Russell 2000 ETF (IWM)
Soros is also gambling on small-cap stocks, which is making a strong comeback. He owns 1.2 million shares of the iShares Russell 2000 ETF (NYSEARCA:IWM), the index that charts the 2,000 smallest stocks in the Russell 3000 index.
There’s good reason to believe Soros is on the right track. Historically speaking, small-cap stocks handily outperform mid and large-cap stocks. In their book Investing in Small Cap Stocks, authors Christopher Graja and Elizabeth Ungar found that over the 75 years studied, small-cap stocks beat mid-cap and large-cap stocks 60% of the time. Small-caps have underperformed their larger brethren, but beginning last October, that began to change, and today, the Russell 2000 is edging higher than the S&P 500.
While the small-cap index does hold many tiny companies with market valuations in just the tens of millions of dollars, it also holds some large ones that stretch the definition of “small-cap.” The largest stock in the index is Super Micro Computer (NASDAQ:SMCI), with a market cap of $55.5 billion. Microstrategy (NASDAQ:MSTR) is the next biggest with a $24 billion valuation. As those two stocks have been amongst the market’s top performers over the past year, it’s unsurprising to see the iShares Russell 2000 ETF also doing well.
AerCap Holdings (AER)
With an $18 billion market valuation, AerCap Holdings (NYSE:AER) isn’t quite a small-cap stock either. But it is having a solid run higher. Shares are up 18% year to date and 57% higher over the last 12 months.
The Irish aircraft leasing company capped a strong year with fourth-quarter revenue of $1.9 billion. However, that was just slightly under Wall Street’s forecast for $1.92 billion. Earnings, though, easily trounced projections, coming in at $3.11 per share versus a $2.45 per share consensus view.
Soros Fund Management owns almost 2.5 million shares at an average buy-in price of just under $63 per share. That values his stake at $183.5 million, which is good for a 3.5% position in his hedge fund, with the stock trading at around $88 per share, which gives Soros a 40% gain on his holdings so far.
Wall Street’s price target aligns with that valuation, but analysts see AerCap rising to $101 per share on the high side. The aircraft leasing company could go higher. CEO Aengus Kelly said, “Given the strong tailwinds that we see for demand for aircraft, engines and helicopters, we are confident about the outlook for AerCap in 2024 and beyond.”
Alphabet (GOOG)(GOOGL)
The third stock Soros is making a large bet on is Alphabet (NASDAQ:GOOG)(NASDAQ:GOOGL), which holds a 3.2% position in Soros Fund Management. He owns 1.2 million shares worth $170.3 million. The tech giant is not one of his best performers, though. The tech giant’s shares are down 13% from his average buy price of $97.
Alphabet has some mixed reviews from hedge fund operators. I noted two weeks ago that Jim Simons at Renaissance Technologies was buying the stock. Still, Paul Tudor Jones from Tudor Investments and the Bill & Melinda Gates Foundation sold off their respective stakes.
It’s hard to bet against Alphabet, though. Google remains a monopoly in search of all but names only, with a 91% market share. Although Alphabet’s advertising revenue disappointed Wall Street earlier this year, it is also an election year. Hundreds of millions of dollars will be dumped into ad campaigns. Google will grab a large portion of those ad dollars.
Also, Google Cloud is a fast-growing rival to Amazon‘s (NASDAQ:AMZN) AWS and Microsoft‘s (NASDAQ:MSFT) Azure. It has outpaced both of them for several quarters, with other irons in the fire, including Waymo self-driving vehicles. Alphabet should not be counted out by any means.
On the date of publication, Rich Duprey did not hold (either directly or indirectly) any positions in the securities mentioned in this article. The opinions expressed in this article are those of the writer, subject to the InvestorPlace.com Publishing Guidelines.
