George Soros' Top Pick of 2012
George Soros may be one of the most polarizing figures in politics and the investing world, but no one can deny his success. His massive bet against the British pound tanked the Bank of England in 1992 and pulled in windfall profits. His equity fund is equally impressive, pulling in more than 20% per year since it started in 1969.
Thanks to required 13F SEC filing requirements, we can see what has been driving his 2012 gains. The world's top retailer, Wal-Mart, is the top position at 4.87%. The second largest position is about two-thirds the size of Soros' Wal-Mart position. He has about $363.1 million invested in Wal-Mart alone.
It isn't hard to see why when you dig into Wal-Mart's financial guidance and the figures in their 2012 Annual Report. The company reported a second quarter earnings-per share ratio of $1.19, marking over 9% growth in year-to-year quarters, after posting slightly disappointing number in the first quarter. Wal-Mart expects to finish 2012 with earnings between $4.83 and $4.93 a share, up from its initial guidance of $4.72-$4.92.
The approximately 15.5 price to earnings ratio certainly isn't the lowest in the sector. But if the guidance holds, the company will have grown 8% in a single year. Its growth will justify the purchase of shares for plenty of investors.
It is also worth looking at the sheer size of Wal-Mart. No one can compete on the same level. Walmart serves 200 million customers every week. About 100 million are in the USA alone. That would be the equivalent of one-third of the entire US population per week.
The company returned $11.3 billion to investors in 2012 through dividends and share repurchases during 2012. That is the equivalent of the entire market cap of Alcoa Inc., Xerox Corp., or Nordstrom plus a billion dollars in change.
While the company aggressively grows in untapped domestic markets and under 69 different brand names in 27 countries, it is also cutting down on bloat and inefficiencies.
With 700 million miles driven per year, The company's 7,000 drivers could haul freight on 1,465 round trips to the moon. Since 2007, the Walmart fleet has delivered 361 million more cases while driving 287 million fewer miles. That reduced the total mileage by the equivalent of 600 round trips to the moon.
That is how big Wal-Mart has become after dominating the retail market in the USA. It is a juggernaut that is consuming the entire global retail sector.
That is why George Soros used it to pad his returns. You can love him or hate him, but you can't argue against his -- and Wal-Mart's – success.
Here is a graphic showing some more information based on 2010 figures:
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