George Soros Adds New Tech Stocks in 4th Quarter, Dumps Some Big …

George Soros Makes Big Q4 Move in Tech Stocks

George Soros is a legendary investor and one of the richest people on the planet, with a net worth of around $8.0 billion. He is also the name behind the $3.3-billion Soros Fund Management LLC.

The fund released its 13F form on February 14, giving investors an insight into the publicly traded companies the fund purchased, added, reduced holdings in, and exited in the fourth quarter of 2018. It was a very busy quarter for Soros Fund Management, with the fund exiting some big tech names, trimming its holdings, and adding others.

We’re deep into the first quarter of 2019, so chances are good that Soros Fund Management has made a number of new changes to its holdings. Still, Soros made some big moves on the tech front in the fourth quarter.

Tech Stocks Faced Serious Pressure in Q4 2018

And frankly, it was a good quarter to make drastic moves in. The markets witnessed a sell-off in October and meltdown in December 2018, making the valuations on some stocks much more attractive.

It was also a quarter in which some of the biggest names in the tech industry, stocks that people tend to believe will continue to rise—like Alibaba Group Holding Ltd (NYSE:BABA), Alphabet Inc (NASDAQ:GOOG), Amazon.com, Inc. (NASDAQ:AMZN), Apple Inc. (NASDAQ:AAPL), Facebook, Inc. (NASDAQ:FB), Netflix, Inc. (NASDAQ:NFLX), QUALCOMM, Inc. (NASDAQ:QCOM), Microsoft Corporation (NASDAQ:MSFT), and salesforce.com, inc. (NYSE:CRM)—were under serious pressure.

Thanks to a number of high-profile industry missteps, including security issues, privacy lapses, and broad-based corporate apathy, investors soured on big tech stocks. Concerns about the trade war between the U.S. and China (the world’s two largest economies) and whether tech stocks could continue to report growing revenue and earnings also weighed heavily on share prices.

Soros Fund Management Updates

This was not lost on George Soros. He bet heavily against President Donald Trump and lost billions. He’s been taking a more proactive approach since then. In the fourth quarter of 2018, Soros Fund Management exited holdings of some of the biggest and most popular tech names in the industry.

(Sources: “Soros Fund Management F13, Q4 2018,” U.S. Securities and Exchange Commission, February 14, 2019; “Soros Fund Management F13, Q3 2018,” U.S. Securities and Exchange Commission, and November 14, 2018.)

Exited Tech Holdings

During the fourth quarter, the fund dumped all 482,500 of its shares in Microsoft and exited Apple (89,300 shares), Alibaba (91,200 shares), and Qualcomm (134,400 shares).

Soros also sold all 308,500 shares of Advanced Micro Devices, Inc. (NASDAQ:AMD), 490,100 shares in Micron Technology, Inc. (NASDAQ:MU), 273,100 shares of Spotify Technology SA (NYSE:SPOT), and all 150,000 shares Activision Blizzard, Inc. (NASDAQ:ATVI).

Reduced Tech Holdings

Soros reduced his holdings in salesforce by 20,000 shares and shrunk his take in Cypress Semiconductor Corporation (NASDAQ:CY) by 5,500,000 shares. The firm slashed its holding in Pandora Media (NYSE:P) by 4,191,315 shares, in Amazon by 6,100 shares, and Sprint Corp (NYSE:S) by 70,900 shares.

Additional Tech Purchases

George Soros still has faith in the technology sector. Despite exiting and trimming his holdings in major tech companies, he is also adding to his portfolio.

During the fourth quarter, Soros added 11,300 shares of Alphabet, bringing his total holdings in the company to 25,000 shares. He also boosted his holding in T-Mobile Us Inc (NASDAQ:TMUS) by 491,000 shares and Coupa Software Inc (NASDAQ:COUP) by 40,000 shares.

New Positions in Red Hat and Verizon

The firm also took new positions in two technology stocks: Red Hat Inc (NYSE:RHT) and Verizon Communications Inc. (NYSE:VZ).

During the fourth quarter, Soros took a new position (141,183 shares) in open source software giant Red Hat Inc. This gives Red Hat Inc, which has a market cap of $32.2 billion, a portfolio weight of 0.89%. In the fourth quarter, the RHT stock price averaged $160.00.

Chart courtesy of StockCharts.com

During the fourth quarter it was announced that IBM (NYSE:IBM) was acquiring Red Hat Inc in a blockbuster deal worth $34.0 billion. That translates into $190.00 per share, or a 62% premium on the company’s then share price.

This acquisition, which is the largest software deal in history, is expected to close in the second half of 2019. (Source: “IBM To Acquire Red Hat, Completely Changing The Cloud Landscape And Becoming World’s #1 Hybrid Cloud Provider,” Red Hat Inc, October 28, 2018.)

Soros also took a new position in Verizon, purchasing 612,315 shares in the communication services giant. This translates into a portfolio weight of 1.24%. Verizon has a market cap of $230.71 billion. During the fourth quarter, Verizon’s share price averaged $57.00.

Chart courtesy of StockCharts.com

George Soros and the Tech Sector

The tech sector was volatile in the fourth quarter of 2018, with stocks having the worst December since the Great Depression and tech stocks ending a nine-year winning streak. It’s been a different story in 2019, with tech stocks being one of the biggest winners.

Some of the tech stocks Soros exited and reduced his holdings in have gone on to realize massive gains in the early months of 2019. At the same time, stocks like T-Mobile and Coupa, two companies Soros stocked up on, have also had spectacular runs in early 2019.

His new position in Red Hat Inc paid off well, we presume, but Verizon is currently in the trough of a roller coaster ride.

George Soros is not alone when it comes to exiting and adding tech stocks to his fund on a regular basis. He’s doing what all smart investors do; realign and balance their portfolio regularly.

What’s interesting about George Soros, though, is that he has, for quite some time, bashed tech stocks.

He called Facebook and Google a “menace” that they “have become obstacles to innovation.” Moreover, he said they are “ever more powerful monopolies” that would be tempted to “compromise themselves.” (Source: “George Soros: It’s ‘only a matter of time’ before dominance of Facebook and Google is ‘broken’,” CNBC, January 28, 2018.)

That may be, but Soros knows it’s his job to make Soros Management Fund money. And he knows the best place to do that is with tech stocks. This might explain why, even after trashing Facebook, he took a position in the social media behemoth in the second quarter of 2018 and sold his entire position just before the markets took a nosedive in October.

Well played.

Analyst Take

It’s impossible to time the market. Even if you’re George Soros. That said, he seems, for the most part, eerily well informed when it comes to market cycles.

Tech stocks continue to be well represented in Soros Fund Management, and, despite being skeptical of tech stocks, George Soros knows they are the future. That’s why he invests in strong tech companies with competitive advantages and strong fundamentals—and sells when he thinks the tide is about to turn.