Soros Makes a Bet on the Net

George Soros has had a love-hate relationship with technology for the past decade.

At first it was hate, when dot-com shares were accelerating unlike anything seen before. The savvy investors such as Buffett, Soros and Robertson initially avoided buying any of these shares, and they weren't incorrect in doing so.

I remember in 1999 everyone was saying that Buffett had lost his touch because he wasn't hip to the new thing. But the reality is that sticking to a discipline in both good times and bad is at the heart of successful investing. Buffett survived that period, had stellar years afterwards, and reclaimed his throne as the world's top investor.

Soros, however, took the plunge into tech through the hands of his then-head portfolio manager, Stanley Druckenmiller, at precisely the wrong time -- the 2000-2001 period. Shares plunged, and so did Soros' funds.

Thanks to the rule requiring portfolios of greater than $100 million to file regular 13F filings with the Securities and Exchange Commission, we get to see snapshots on a regular basis of what Soros is up to. And the latest 13F filing shows that he's taken the plunge into tech again.

This follows a period of equity bearishness for Soros. In fact, on his 13F filing detailing his holdings in the second quarter of this past year, he showed that he had reduced his stock holdings from $2.3 billion to $1.8 billion from March 30 to June 30.

Now, however, his filing discloses that he increased his equity exposure to $2.6 billion and bought a lot of tech stocks. He now holds 292,500 shares of Amazon.com(AMZN), 647,000 shares of eBay(EBAY), 1.07 million shares of Intel(INTC), and 1.8 million shares of Microsoft(MSFT). Other than Microsoft, all of these are brand-new holdings, and his Microsoft stake more than doubled from 790,000 shares.

Why These Stocks?

Technology has finally intersected with deep value. Microsoft, for instance, is trading at less than 20 times next year's earnings. In the past 10 years there's never been a year when it has traded at less than 25 times earnings. People assume there's no growth left in the stock.

And yet with this year's release of the Xbox, dozens of new games, and the highly anticipated Vista software, there's no better guarantee than that Microsoft is going to continue to surprise to the upside. Not to mention the company will increase buybacks, dividends, etc. as it continues to add $1 billion in cash a month to its stockpile.