While the summer months have proven less lucrative for stock market participants, the general trend this year has been up. The rise is primarily due to the hype surrounding artificial intelligence, with many cultural commentators speculating that the impact of this technology could be as great as that of the industrial revolution.
But not all of them are completely deterministic. There is rumblings on Wall Street that we are now entering an AI-driven bubble, with some prominent market watchers claiming the rally may not be sustainable and setting bearish expectations for markets.
But if we’re entering a bubble, and then we go on the earlier recommendation of one investment myth, investors should take advantage. “When I see a bubble forming, I rush out to buy, and add fuel to the fire,” one says George Sorosfamous quotes. “It’s not irrational.”
Soros is one of the all-time greats of Wall Street and one of the world’s most successful hedge fund managers of all time with a personal fortune of $6.7 billion, so it’s always worth taking a look at what he’s been up to.
And that’s exactly what we did – delve into a couple of stocks he’s invested his money in recently. Use TipRanks database To find out what the analyst community had to say, we learned that each indicator boasts Buy ratings and significant upside potential. Let’s take a closer look.
AerCap Holding (AER)
Coming first on our Soros approved list is AerCap Holdings, a prominent player in the global aircraft leasing industry. The company specializes in aircraft leasing and fleet management services and enjoys a broad and diversified portfolio while serving a wide range of airlines around the world, including Etihad Airways, Emirates Airlines, El Al and many more. Some numbers give an idea of its size; The company owns 1,733 aircraft, more than 300 helicopters and nearly 1,000 engines, making it one of the largest aircraft leasing companies in the world.
It’s a values proposition that served the company very well in its recently reported print of the second quarter. Revenue rose 15% year-over-year to $1.92 billion, while exceeding Wall Street expectations by $110 million. Adjusted net income for the period was $596 million, which equals $2.56 per share, beating forecasters’ expectations by $0.50.
Looking ahead, the company raised its revised full-year 2023 forecast to a range of $8.50 to $9.00 (against the $7.00 to $7.50 advance) and, in a move that pleases the investor, authorized a $500 million share repurchase program.
Soros did not want to miss an opportunity. By snapping up 305,824 shares during the second quarter, it gave its hedge fund a 58% boost. With the fund’s total position in AER now at 841,249 shares, it’s valued at $51 million.
This positive attitude is also echoed by Goldman Sachs analyst Kathryn O’Brien. Citing the second-quarter earnings announcement, the analyst remains confident about the company’s future prospects.
“Our June Q results included “positive driver updates that support our Buy rating and indicate continued strong demand for aviation assets,” O’Brien said. The improvement is at a slow but steady rate, reaching 11.2% in June Q against 11.1% in March Q and 10.9% in December 2022. . And as a reminder, only a small percentage of the fleet turns over each quarter, so continued improvement in portfolio yield is likely to drive a larger rate of change in incremental lease rates.”
This Buy rating is supported by a price target of $86, which indicates that the stock has room to grow approximately 42% over the next year. (To watch O’Brien’s track record, click here)
Overall, AER gets the unanimous support of Wall Street analysts. The last six reviews are all positive, making the collective view here a solid buy. At $80.50, the average target would suggest a 12-month stock appreciation of approximately 33%. (be seen AER stock forecast)
Renaissance Re Holding (RNR)
Soros is famous for many quotes, one of which is that “a good investment is boring.” It’s unknown if he was thinking directly of the insurance industry when he said it, but even so, our next Soros-backed name operates in a space less suited to thrill-seekers.
RenaissanceRe Holdings, often referred to as RenRe, is a reinsurance and insurance company known as a leader in natural disaster (nat-cat) reinsurance. Nat-cat reinsurance refers to the practice of reinsurance of risks related to natural disasters such as hurricanes, earthquakes, floods, and other catastrophic events.
RenRe has earned a reputation for its expertise in assessing and managing these risks by providing reinsurance coverage to other insurance companies that wish to mitigate their exposure to these types of events. By transferring a portion of the risk to RenRe in exchange for premium payments, these insurers can better manage their overall risk profile and financial stability.
The company saw net investment income rise significantly in the second quarter, reaching $292.7 million. This figure reflects a growth of 173% compared to the same period in the previous year. RenRe also reported its third consecutive quarter of average annual equity operating return, topping 28%. All in all, on the bottom line, adjusted earnings per share of $8.79 beat expectations by $1.39.
Reflecting a new position for Soros, his fund triggered 186,648 shares of RNR in the second quarter. At the current market price, it’s worth just over $33 million.
During the second quarter, the company also announced that it had acquired Validus Re from AIG for $3 billion, as part of RenRe’s efforts to become a top 5 global property and casualty reinsurer.
This acquisition informs Wells Fargo’s positive thesis on Elyse Greenspan. The five-star analyst writes, “We think Ren is positioned to continue to deliver strong returns, especially if we have a normal to below-normal hurricane loss year. On top of that, they’ll then offer the accretive Validus Re deal, which could be even more accretive. It is expected that the Validus Re portfolio has seen good growth this year, while Ren has set its forecast using the 2022 premium base.”
These comments support Greenspan’s Overweight (i.e. Buy) rating on RNR, while its $263 price target suggests a 48% yield could be in store over the next year. (To watch Greenspan’s track record, click here)
Overall, 4 more analysts join Greenspan in the bullish camp, and with the addition of a couple of those sitting on the fence, the stock claims a Moderate Buy consensus rating. Shares are currently priced at $177.77, with an average price target of $250.33 implying an upside of about 41%. (be seen RNR 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.