Like any thriving industry, the investing world has its own legends, and their history is usually peppered with defining moments on which their mythical status rests. In George Soros’ case, he will be forever known as “the man who broke the Bank of England” after he pocketed $1 billion in a single day when betting against the British pound.
Considered one of the greatest trades ever, Soros was evidently right when making such a bold move back in 1992. But the billionaire investor and philanthropist has put the reason to his success down to not only being right but also knowing when he is wrong and learning from those mistakes.
That said, he amassed his fortune by making the right choices most of the time and with this in mind, we decided to track down two of his recent purchases. With help from the TipRanks database, we can also find out whether the Street’s stock experts agree with Soros’ latest moves. Let’s find out.
The Estée Lauder Companies (EL)
The first Soros-endorsed name we’ll look at is Estée Lauder, a multinational cosmetics company. Its offerings encompass skin care, makeup, fragrance and hair care products and all are sold via department stores, specialty multi-brand retailers and other retail and digital channels. Apart from its namesake brand, the portfolio includes names such as Clinique, Bobbi Brown Cosmetics, La Mer and Tom Ford Beauty, amongst others.
Earlier this month, the company released results for the fiscal second quarter of 2023 (December quarter). While revenue fell by 16.6% year-over-year to $4.62 billion, it still came in $40 million above the forecast. Likewise on the bottom-line, adj. EPS of $1.54 beat the $1.29 predicted by the analysts.
However, investors were disappointed with the outlook, which the company lowered on account of November and December Covid-related travel and staffing disruptions in Hainan (where its largest travel retail store in the world is located).
Headwinds or not, Soros must believe there’s plenty of value here. During Q4, he opened a new position in EL, with the purchase of 112,500 shares. Right now, these are worth more than $28 million.
While factoring in the current issues, Raymond James analyst Olivia Tong also sees plenty to like about EL.
“Despite the delay in China reopening, EL continues to be one of the most consistent long-term growth stories in Beauty, with the headwinds of today turning into tailwinds over the next few months, supported by share gains in China across all 4 main Beauty categories,” Tong explained. “Key opportunities include growth in ultra-prestige, with notable callouts including La Mer in Skin Care, Tom Ford Beauty in Makeup, and Jo Malone London in Fragrance, as well as the growth contribution to Travel Retail from a return to Hainan, with only 20% of Chinese citizens holding passports/traveling abroad.”
Based on all of the above factors, Tong rates EL shares a Strong Buy and sets a $315 price target. Apparently, the analyst believes the stock could surge 26% over the next twelve months. (To watch Tong’s track record, click here)
Elsewhere on the Street, with an additional 16 Buys, 4 Holds and 1 Sell, the stock claims a Moderate Buy consensus rating. Going by the $284.62 average target, the shares will post growth of 14% in the year ahead. (See Estée Lauder stock forecast)
Cboe Global Markets (CBOE)
The next stock Soros has been leaning into is Cboe Global Markets, a big player in the global financial markets and a leading exchange operator. The company owns the Chicago Board Options Exchange – the U.S’s largest options exchange – and due to its monopolies in both its VIX and SPX contracts, is a dominant force in index options. In total, under the CBOE umbrella there are 7 equities exchanges, 4 equity options exchanges, and one futures exchange and foreign currency exchange, each.
In its recently released Q4 earnings, revenue rose by 17.1% year-over-year to $457.1 million, while adj. EPS climbed from $1.70 in 4Q21 to $1.80. Looking ahead, for 2023, the exchange anticipates organic total net revenue growth of 7-9%, which is higher than its medium-term guidance range of 5-7%. However, adjusted operating expenses for the year are expected to increase from $652 million in 2022 to the range between $769-779 million.
While Soros already had a position in CBOE, he upped his stake considerably during Q4 – by 341% via a purchase of 203,100 shares. With total holdings now reaching 262,800 shares, his stake is worth over $26 million at the stock’s current price.
Soros evidently thinks the shares are undervalued and that is also the opinion of Rosenblatt analyst Andrew Bond, who believes any concerns about growing expenses are misplaced as the company is “probably being conservative given its strong history of expense management.”
“While the street is likely to be somewhat concerned about double-digit expense growth guidance in 2023, we believe the corresponding increase in organic revenue growth guidance should bear more weight as CBOE continues to flex its growing operating leverage,” the analyst went on to add. “In our view CBOE is pulling all of the right levers and will continue to grow revenue at a double-digit pace this year which we expect to lead the core exchange group. Despite the best growth rate CBOE trades at the lowest multiple in the space.”
Accordingly, Bond rates CBOE a Buy alongside a $175 price target. The implication for investors? Potential upside of ~36% from current levels. (To watch Bond’s track record, click here)
Turning now to the rest of the Street, 3 Buys, 1 Hold and 1 Sell have been issued over the last three months. Therefore, CBOE gets a Moderate Buy analyst consensus. Based on the $146.80 average price target, shares could soar 14% over the next 12 months. (See CBOE stock forecast)
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Disclaimer: The opinions expressed in this article are solely those of the featured analysts. The content is intended to be used for informational purposes only. It is very important to do your own analysis before making any investment.