Connect with us

Investing

Stocks George Soros and Warren Buffett Agreed On in 2nd Quarter

Published

on

As noted in part one, legendary investors Warren Buffett (TradesPortfolio) and George Soros(TradesPortfolio) have opposing views on how to approach investing. Buffett primarily takes big stakes in quality companies he expects to do well over at least five years’ time and holds them “forever.” Soros instead will speculate on companies based on short-term events and bet on trends.

But sometimes the twain meet. In the first quarter, they held a number of stocks in common, like Goldman Sachs, IBM and MasterCard. In a second-quarter twist, Soros sold out of many of these stocks, keeping a like mind with Buffett on only eight.

The exodus may also suggest a wariness of the markets on the part of Soros. His fund sold nearly 79% of its holding of the S&P 500 (SPY) ETF, which was its biggest chop in two years. Soros invested in the U.S. stock benchmark ETF in the first quarter of 2014 and enjoyed its run up from the low $180s to the mid-$200s today.

1047136633.png




The investor in macroeconomic trends also in the second quarter reduced his exposure to basic materials, consumer defensive, communications services, energy, industrials and technology. Increases in other sectors were marginal.

By contrast, Buffett has held three of his five top holdings – Wells Fargo & Co. (NYSE:WFC), Coca-Cola (NYSE:KO) and American Express (NYSE:AXP) – for more than six years.

Both the investors have unique relationships to their funds. Soros’ $30 billion family office Soros Fund Management is led by Chief Investment Officer Dawn Fitzpatrick. Buffett’s Berkshire Hathaway (NYSE:BRK.A)(NYSE:BRK.B) portfolio employs two managers in addition to Buffett, Ted Weschler and Todd Combs. Berkshire rarely discloses which stock buys and sells belong to the two deputy investors.

Some of the stocks Berkshire and Soros Fund Management both retained in the second quarter were: Apple (NASDAQ:AAPL), Mondelez (NASDAQ:MDLZ) and Monsanto (NYSE:MON).

Apple (NASDAQ:AAPL)

Buffett has weighted 12% of his portfolio in Apple, which includes a $123.6 million boost in the second quarter.

Soros has periodically bought and sold Apple over the years at appreciating share prices. He increased his position 21.4% to 1,700 shares or 0.01% of the portfolio in the recent quarter.

444255264.png

Apple’s Aug. 1 earnings announcement pushed the stock up almost $10 per share in one day. The company saw services revenue hit an all-time record as well as 7% revenue growth overall, marking its third year of revenue increase.

In addition to the iPhone 8, Apple plans release of several new products and services in the back half of the year: an iOS 11 upgrade bringing hundreds of updates to iPhone and iPad, an intelligent home music speaker and an iMac Pro.

For its upcoming fiscal fourth quarter, Apple forecasts revenue in a range of $49 billion and $52 billion with gross margin between 37.5% and 38%. The numbers compare to $46.9 billion in revenue and 38% gross margin in the prior-year quarter.




Mondelez (NASDAQ:MDLZ)

Soros holds 1.4 million shares of Mondelez after a 9.3% increase in the second quarter, which it makes it 1.3% of his portfolio.

Buffett eliminated 92% of his Mondelez holding four years ago and retains 578,000 shares, which amounts to 0.02% of his portfolio.

1882459991.png

Mondelez shares are off 8% year to date after tumbling last week when Buffett announced on CNBC that Kraft Heinz Co. would not acquire the snack food company. Buffett controls the largest percentage of Kraft Heinz shares and shares decision-making with private equity firm 3G Capital.

In the second quarter, Mondelez revenue fell in every geographic segment except Latin America, where it grew 0.6%. North American revenues saw the steepest decline at 8.5%. Net earnings rose 7.3% to $498 million while diluted EPS reached 32 cents with a 10.3% increase. Gross profit margin slid to 38.8%, down 110 basis points.

For the year, it expects non-GAAP organic net revenue to increase at least 1%, with double-digit adjusted EPS growth on a constant-currency basis. It also forecasts around $2 billion in free cash flow.

Monsanto (NYSE:MON)

Like many of his stocks, Soros wove in and out of Monsanto for more than six years. He nearly tripled the position in the June quarter, making it 0.33% of his 186-stock portfolio.

Buffett has a $951.8 million stake in Monsanto that he bought in the fourth quarter, has not changed and that represents 1.8% of his portfolio.

599096409.png

The fertilizer and seed company’s shares are up 8.9% year to date as the company awaits a merger with Bayer Aktiengesellschaft that will pay $128 per share in cash for Monsanto shareholders. Monsanto’s shareowners approved the deal on Dec. 13, but the company reported on Aug. 22 that the European Commission launched a Phase II investigation into it on concerns that the combination may limit competition in the field of pesticides, seeds and traits.

Bayer said it hopes to work with the commission to obtain approval by the end of the year.




Free "dummies guide" to trading options

Did you know trading options can actually be safer and more profitable than buying and selling stocks? Video and plain English training guide reveals how to get started tonight. 100% free.

Download now.

Continue Reading

Gold and Silver

Why Gold’s 47-Year Bull Market Will Continue

The following monthly chart shows that relative to a broad basket of commodities*, gold commenced a very long-term bull market (47 years and counting) in the early-1970s.

Published

on

The following monthly chart shows that relative to a broad basket of commodities*, gold commenced a very long-term bull market (47 years and counting) in the early-1970s. It’s not a fluke that this bull market began at the same time as the final official USD-gold link was severed and the era of irredeemable free-floating fiat currency kicked off.

Gold Commodity Ratio 1959-2017

Gold Commodity Ratio 1959-2017

Anyone attempting to apply a traditional commodity-type analysis to the gold market would have trouble explaining the above chart. This is because throughout the ultra-long-term upward trend in the gold/commodity ratio the total supply of gold was orders of magnitude greater, relative to commercial demand, than the supply of any other commodity. Based on the sort of supply-demand analysis that routinely gets applied to other commodities, gold should have been the worst-performing commodity market.

The reason that a multi-generational upward trend in the gold/commodity ratio began in the early-1970s and is destined to continue is not that gold is money. The reality is that gold no longer satisfies a practical definition of money. The reason is the combination of the greater amount of mal-investment enabled by the post-1970 monetary system and the efforts by central bankers to dissuade people from saving in terms of the official money.

In brief, what happens is this: Central banks put downward pressure on interest rates (by creating new money) in an effort to promote economic growth, but the economy’s prospects cannot be improved by falsifying the most important price signals. Instead, the price distortions lead to clusters of ill-conceived investments, thus setting the stage for a recession or economic bust. Once it is widely realised that cash flows are going to be a lot less than previously expected, there is a marked increase in the general desire to hold cash. At the same time, however, central banks say that if you hold cash then we will punish you. They don’t use those words, but it is made clear that they will do whatever it takes to prop-up prices and prevent the savers of money from earning a real return on their savings. This prompts people to look for highly liquid assets that can be held in lieu of the official money, which is where gold comes in.

This is why the gold/commodity ratio tends to trend downward when everything seems fine on the surface and rocket upward when it becomes apparent that numerous investing mistakes have been made and that the future will be nowhere near as copacetic as previously assumed.

It’s reasonable to expect that the multi-generational upward trend in the gold/commodity ratio that began in the early-1970s will continue for at least as long as the current monetary system remains in place. Why wouldn’t it?

*For the broad basket of commodity prices the chart uses the CRB Index up to 1992 and the GSCI Spot Commodity Index (GNX) thereafter.

Originally Published at Investing.com

Free "dummies guide" to trading options

Did you know trading options can actually be safer and more profitable than buying and selling stocks? Video and plain English training guide reveals how to get started tonight. 100% free.

Download now.

Continue Reading

Economy

Uber Paid Hackers to Keep Massive Breach a Secret

Hackers stole personal information on 57 million Uber Technologies Inc. customers and drivers in October 2016, as part of a massive data breach that the ride-hailing service willingly hid from victims and U.S. regulators.

Published

on

Hackers stole personal information on 57 million Uber Technologies Inc. customers and drivers in October 2016, as part of a massive data breach that the ride-hailing service willingly hid from victims and U.S. regulators.

Uber told Bloomberg on Tuesday that it paid the hackers responsible $100,000 to delete the stolen data and keep the breach quiet. The company declined to disclose the identities of the offenders and said it is confident that the stolen information was never used.

“None of this should have happened, and I will not make excuses for it,” Uber chief executive Dara Khosrowshahi said in a statement acknowledging the breach and cover-up. “While I can’t erase the past, I can commit on behalf of every Uber employee that we will learn from our mistakes.” (See also: Uber Will IPO in 2019.)

According to Bloomberg, the hackers gained access to names, email addresses and phone numbers of 50 million Uber customers around the world, as well as personal information of about 7 million drivers, including 600,000 U.S. driver’s license numbers. Uber added that more sensitive information, such as location data, credit card, bank account and social security numbers, wasn’t compromised in the October 2016 attack.

Khosrowshahi said that the company has since tightened its security and “obtained assurances that the downloaded data had been destroyed.” Uber’s newly named CEO added that two of the employees responsible for failing “to notify affected individuals or regulators” following the attack were ousted. Chief security officer Joe Sullivan is believed to be one of them.

Uber’s co-founder and former CEO, Travis Kalanick, was made aware of the breach one month after it took place, the company told Bloomberg. Kalanick reportedly found out about the matter shortly after Uber settled a lawsuit with the New York attorney general over data security disclosures. (See also: Uber CEO Travis Kalanick Resigns.)

News of the company’s breach and cover-up has already prompted New York Attorney General Eric Schneiderman to launch an investigation. Bloomberg also reported that Uber is being sued for negligence by one of its customers.

“Uber failed to implement and maintain reasonable security procedures and practices appropriate to the nature and scope of the information compromised in the data breach,” according to the complaint filed Tuesday in federal court in Los Angeles.

Hackers have successfully infiltrated numerous companies in recent years, including Yahoo, now owned by Verizon (VZ), Time Inc.’s (TIME) MySpace, Target Corp. (TGT), Anthem Inc. (ANTM) and Equifax Inc. (EFX). (See also: Yahoo Says All 3 Billion Accounts Were Affected in 2013 Attacks.)

Read more: Uber Paid Hackers to Keep Massive Breach a Secret | Investopedia https://www.investopedia.com/news/uber-paid-hackers-keep-massive-breach-secret/#ixzz4zLLDGrL4
Follow us: Investopedia on Facebook

Free "dummies guide" to trading options

Did you know trading options can actually be safer and more profitable than buying and selling stocks? Video and plain English training guide reveals how to get started tonight. 100% free.

Download now.

Continue Reading

Cryptocurrencies

The 3 Best Bitcoin Stocks In 2017

When the calendar does finally flip to 2018, there’s a really good chance we’ll look back and refer to 2017 as the year of the cryptocurrency.

Published

on

When the calendar does finally flip to 2018, there’s a really good chance we’ll look back and refer to 2017 as the year of the cryptocurrency. At the beginning of the year, the aggregate market cap of all cryptocurrencies was a mere $17.65 billion. By Nov. 12, the 1,276 listed digital currencies had an aggregate market cap of $192 billion. You know, just your standard 988% return in 10 months and 12 days. By comparison, it’s taken the S&P 500 decades to deliver the same return for long-term investors.

—Sponsored Link—
36-Year-Old CEO Bets $560,100,000 On 1 Stock
A little-known Canadian company just went public and it’s already making people rich.
Click here to learn more.

Leading the charge has been the crypto trio of bitcoin, bitcoin cash, and Ethereum. Bitcoin cash, which came into being just months ago after bitcoin’s soft fork, recently exploded higher by 300% in a matter of days, briefly surpassing the market cap of Ethereum. Speaking of which, Ethereum has seen its value increase by nearly 3,700% year to date, to a market cap of $29 billion. Meanwhile, bitcoin, while “underperforming” in a sense compared to its peers, has gained 485% this year (through Nov. 12) and has a market cap of $95 billion.

2017’s best bitcoin stocks
As you might imagine, the popularity of, and gains in, bitcoin have made it an attractive investment. Of course, decentralized cryptocurrency exchanges where bitcoin can be bought aren’t for everyone. Instead, investors have been eagerly looking for bitcoin exposure in the stock market. The following three equities, which have direct and/or indirect ties to bitcoin, have been the best bitcoin stocks of 2017.

Bitcoin Investment Trust: Up 623%
Perhaps unsurprisingly, the top bitcoin stock in 2017 has been Grayscale’s Bitcoin Investment Trust (NASDAQOTH: GBTC), which is up 623% through Nov. 12. The Bitcoin Investment Trust owns a relatively fixed amount of bitcoin, making it easy for investors to calculate its net asset value. Considering its listing on the over-the-counter boards, buying into the Bitcoin Investment Trust gives investors potentially improved liquidity, and perhaps a bit of extra transparency, over purchasing bitcoin directly on a decentralized exchange.

But there’s also a downside that’s pretty tough to overlook. Namely, its market cap has consistently ranged between 25% and 100% higher than its net asset value in recent months. In other words, investors have been willingly paying a huge premium to have a stake in an equity that holds bitcoin, rather than purchasing bitcoin from a decentralized exchange. Is added liquidity worth paying 25% or 50% more than the underlying value of the coins? I really don’t think so, which is why this could be the most dangerous bitcoin investment.

And should you need an added reason to keep your distance, the annual management fee for essentially sitting on bitcoin is a hearty 2% of your investment.

Overstock.com: Up 199%
Another company that’s caught the bitcoin bug is online retailer Overstock.com (Nasdaq: OSTK), which has gained 199% since the year began. But unlike the Bitcoin Investment Trust, bitcoin isn’t directly responsible for all of Overstock’s gains this year. Although Overstock is the very first major retailer to accept bitcoin (which it’s done since 2014), as well as Ethereum, bitcoin cash, LiteCoin, Dash, and Monero, it’s the company’s subsidiary, tZero, that’s drawing all of the attention.

For months, tZero has been building out the Medici t0 blockchain.  For those unfamiliar, blockchain is the technology that underlies most virtual currencies. It’s the digital and decentralized ledger that records transactions without the need for a financial intermediary like a bank. Best of all, since its usually open source, tampering with the logged data is practically impossible. Blockchain could very well be the future for the financial services industry.

With regard to Overstock, its Medici t0 will be a blockchain-based securities lending system that’ll go toe to toe with Wall Street firms. However, the Medici t0 blockchain is expected to do so more efficiently, securely, and for a lower cost than traditional Wall Street firms. There’s a lot of hype surrounding this blockchain project, which is a big reason Overstock has rallied so much. It remains to be seen if the hype can deliver tangible results.

NVIDIA: Up 102%
Graphics card manufacturer NVIDIA (Nasdaq: NVDA) is another top bitcoin stock, having mustered a gain of 102% since the beginning of the year. In years’ past, the high-powered graphics cards made by NVIDIA were used to mine bitcoin. Today, however, a more specialized chipset known as ASIC handles most bitcoin mining. Nonetheless, NVIDIA’s graphic cards remain a staple for mining a number of burgeoning cryptocurrencies.

But herein lies the dilemma for NVIDIA’s shareholders: The company doesn’t break out what percentage of its sales and sales growth is a direct result of digital currency mining. The company recently reported $1.56 billion in gaming revenue in the third quarter, which is 25% higher than the previous year, and the category where mining sales would be included. But there’s simply no further breakdown within the gaming category, which leaves Wall Street and investors to guess.

However, investors have been able to take advantage of NVIDIA’s growth in data centers and the cloud, which is where its true long-term foundation lies. In just the past seven quarters, data center sales have jumped from $97 million to $501 million. Because NVIDIA has this rapidly growing enterprise and gaming foundation, this is probably the most palatable investment of all stocks with cryptocurrency ties.

This article originally appeared on The Motley Fool.

Free "dummies guide" to trading options

Did you know trading options can actually be safer and more profitable than buying and selling stocks? Video and plain English training guide reveals how to get started tonight. 100% free.

Download now.

Continue Reading
Advertisement

Trending