BALTIMORE (Stockpickr) -- It isn't shocking that investors on and off Wall Street put such a big emphasis on what the world's most successful fund managers are doing with their portfolios. After all, these are people who've proven their market prescience time and again. All too often, though, investors only focus on what the big-name investors are buying. When markets get tough, it makes sense to look at stocks they hate too.
This week, we'll take a look at the names that billionaire investor George Soros and his team sold off from the estimated $27 billion funds at
Soros, if you're not familiar, made a major impact on the financial world back in the 1970s when he launched the famed Quantum Fund, popularizing international investing with phenomenal returns. Today,
estimates that Soros is worth $14.2 billion, making him one of the 20 richest Americans.
I'll admit, "hate" may be a bit of a strong word for the companies on this list. Even so, Soros' portfolio management team felt strongly enough about
. That's why we're going to take a closer look at what's going on in these names.
Plains Exploration & Production Company
Plains Exploration & Production Company
was by far the largest position closed out by Soros Fund Management last quarter. The firm sold off a $151.6 million stake in the mid-cap oil and gas exploration firm, which weighs the position in at more than twice the size of the next-nearest closed-out stock. So what's going on with Plains right now?
Performance has certainly been strong in the last year. Buoyed by rising crude prices, Plains Exploration has seen its share price rally by nearly 49% in the last year, a factor that suggests sellers may be more interested in taking gains off the table than unloading a hemorrhaging name from their portfolios. Performance in Plains has been magnified because the firm has taken increased energy prices as a cue to ramp up production, dramatically increasing margins in the process.
Because Plains has traditionally been a strong performer among independent E&P names, the decision to unload shares seems more like an indictment against oil than against Plains itself. With a correlation above 0.97 as oil pushed to highs earlier this year, the move shouldn't come as a big surprise. Oil bulls would do well to take a look at shares right now.
also trimmed its position in Plains in the first quarter, selling 4.1 million shares to leave 5 million shares in its portfolio.
maintained its 604,000-share position. Plains shows up on a recent list of
iShares Gold Trust
Oil isn't the only commodity that Soros and company limited its exposure to. The firm has also significantly reduced its exposure to gold by selling a $69.5 million-share position in the
iShares Gold Trust ETF
, a fund that holds physical gold bullion to back the value of units. Minus administrative costs, the fund is designed to move in step with the spot price of gold.
IAU is really only part of Soros' gold-selling story. The firm also significantly reduced its nearly $650 million stake in the
SPDR Gold Trust ETF
, a fund that's nearly identical to the iShares offering (with the exception of a higher management fee and a massive capitalization). The firm still holds a little over 1% of its previous holdings in GLD, which shows up on a list of
from the first quarter.
Soros has made no secret about his belief that gold is in a bubble -- and of his desire to unload his firm's exposure to the precious metal before it bursts. Even so, gold is still looking relatively strong from a technical perspective right now, a factor that could make his selling a bit premature. Until gold prices fall below $1,460, it remains in an uptrend.
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Shares of consumer electronics retailer
, one of the
, have floundered a bit more in 2011. The company has seen a double-digit decline in value since the start of the year, as the real impact of a still-weak economy trickled down to its income statement. While 2009 brought better-than-expected store performance for Best Buy as consumer purse strings loosened, the company has been battling higher costs and contracting margins more recently.
That has come as a surprise to some, especially given Best Buy's market positioning right now. At the beginning of 2009, the firm lost its last true direct competitor in Circuit City, and many of the gloomiest economic forecasts doled out in the height of the recession have proven unfounded. Best Buy has also been building out its revenue stream with more fee-based services, a significantly higher margin contribution to the company's bottom line.
By far, the biggest detractor for Best Buy comes from uncertainty over consumer discretionary spending during the rest of 2011 and 2012. Best Buy reported its first-quarter numbers yesterday, but earnings surprise wasn't enough to really move shares. Soros Fund Management unloaded all of its $72 million stake in the company last quarter.
On the bullish side, Best Buy shows up in a list of
scooped up 6 million shares to initiate a new position in the stock in the first quarter.
is another major retail name that Soros Fund Management unloaded from its portfolios in the last quarter. The $184 billion store ranks as the biggest retailer in the U.S. -- and one of the biggest in many of the international markets in which it operates. Still, Soros' firm sold off a $50.5 million stake in the company, according to regulatory filings.
Wal-Mart's market positioning gives it an enviable positioning, particularly when economic times get tough. The company's sheer scale means that it's able to hold pricing power over its suppliers, pounding its costs down and offering lower prices than most peers can manage. As a result, the company is largely insulated from the trading down that consumers undertook in the height of 2008's recession.
At the same time, a massive push for international growth has had a major impact on the company's sales -- at present, international revenue makes up a full quarter of sales.
That said, inflation is already having a material impact on Wal-Mart's performance domestically. As incredibly consumer-exposed commodities, such as oil, get bid up in the marketplace, Wal-Mart is likely to feel the brunt of consumers' belt-tightening in other areas.
One big name still betting on Wal-Mart is
; in the first quarter, Berkshire Hathaway maintained its 39 million-share position in the stock, which comprises 3.8% of the total portfolio. Wal-Mart shows up on a recent list of
In the same vein as Wal-Mart and Best Buy is
; Soros Fund Management sold off a $21.5 million position in the home improvement retailer last quarter.
In the past few years, Lowe's has been pressured by its correlations with the housing market. As real estate continues struggle, homeowners have been reluctant to pour additional cash into their homes. While that poses a significant headwind to the company in the next couple of years, Lowe's is at least well-positioned to ride out the storm.
The company was able to maintain a high level of profitability throughout the recession, and while quarterly revenue took a small hit in the last quarter, the fact remains that Lowe's has been able to keep its numbers consistent despite those negative factors. Frankly, shares have taken some knocks in the last year -- this may be a good opportunity for long-term buyers to get into this stock.
On the bullish side of Lowe's is
, which increased its position in the stock by 384.5%, to 2.5 million shares, in the first quarter.
-- Written by Jonas Elmerraji in Baltimore.
To see the stocks George Soros' firm actually likes, check out
. And check out Stockpickr's other
, including Carl Icahn's and David Tepper's.
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At the time of publication, author had no position in stocks mentioned.
Jonas Elmerraji is the editor and portfolio manager of the Rhino Stock Report, a free investment advisory that returned 15% in 2008. He is a contributor to numerous financial outlets, including Forbes and Investopedia, and has been featured in Investor's Business Daily, in Consumer's Digest and on MSNBC.com.