George Soros' Worst-Performing Stocks of 2016 So Far

*Year-to-date price return at the close on Oct. 31. Data sources: Soros Fund Management filings, WhaleWisdom, author's calculations.

For the purpose of this article, I looked at the stocks in the firm's portfolio on June 30, some of which were bought this year (in which case, Soros' gains almost certainly differ from the stocks' year-to-date performance). Furthermore, I have only considered stocks that represented at least a half percent of the total value of reported holdings at the end of the second quarter.

Finally, I would remind readers that Foolish investors do not buy or sell stocks solely on the basis of the actions of other investors -- no matter how famous or successful. If you invest in individual stocks, it is imperative that you do your own due diligence. With that in mind, here are my cursory thoughts on three of these positions.

Image source: LensaMalaysia.com, reproduced under CC BY 2.5.

China Biologic Products Inc.

Investors in China Biologic Products have had a rough ride in 2016, with the shares down 17% through Monday's close. However, that performance is not far out of line with that of the Nasdaq Health Care Index (down 13%). At 24 times next year's earnings-per-share estimate, the stock doesn't look conventionally cheap, but even this value investor recognizes that China's largest private producer of blood plasma products presents some attractive fundamental characteristics and may very well be undervalued.

Consider, for example, that the company operates in a market for blood plasma products that is subject to stringent regulation, presenting high barriers to entry (management clearly understands the notion of competitive advantage). In addition, despite the fact that domestic demand for these products outstrips supply, the market is closed to imports.

Such conditions amount to a highly favorable environment for incumbent companies; it's no surprise, then, that China Biologic's financial statements do not read like those of a biotechnology "concept company": The firm is conservatively financed, with a net cash position, and highly profitable. Gross margin in 2015 was an eye-popping 64%, with a return on invested capital of 26%. In sum, China Biologic appears to be a highly attractive "franchise" business and deserves a closer look from experienced investors with a genuine tolerance for volatility.

CIT Group Inc.

Shares of middle market lender and transportation asset lessor CIT Group suffered a hair-raising decline of more than a third during the first quarter's market turmoil, and they have yet to get back to flat for the year. That's surely not the send-off that ex-CEO John Thain was looking for as he retired at the end of March, replaced by Ellen R. Alemany.

CIT isn't a bad business: Over the three years 2012 through 2015, it achieved an average return on assets of 1.90%, which compares favorably against the same figure for Wells Fargo (1.42%) or U.S. Bancorp (1.53%) -- two of the best-run, most profitable lenders in the country (put aside the sham-account scandal at Wells Fargo for now). Previous years' results indicate that CIT lacks the banks' earnings stability.

CIT was an authentic deep value play at the depths of the sell-off in February, and a cursory survey suggests it remains somewhat undervalued; furthermore, the planned divestiture of the aircraft leasing business is a potential catalyst for a return to fair value. For professional investors such as Soros Fund Management, that type of situation has its appeal. However, I recommend individual stock pickers focus on businesses that are, if not world-class, at least obviously superior -- a standard I think CIT fails to meet.

Still, if you're a dedicated, knowledgeable investor with the time and inclination to closely monitor your investments, CIT may be worth a look. Those who wish to learn more about this situation could do worse than to read this March 2016 write-up from a member of the highly respected Value Investors Club.

Caesars Entertainment Corp.

Gaming group Caesars Entertainment Corp. is a hedge fund favorite -- on top of being controlled by private equity groups Apollo Management and TPG. Beyond Soros Fund Management (and Goldman Sachs), there are five hedge funds within the top 10 shareholders. In general, I like to see "smart money" among a company's top shareholders, but this level of involvement makes me wary. Granted, Soros itself has owned the shares since the first quarter of 2012, but despite the fact that many fundamentally oriented hedge fund managers like to wrap themselves in the mantle of long-term ownership in describing their strategy, their actions often contradict them.

None of this would disqualify Caesars as a potential investment if I were convinced it is an outstanding business that is being run to benefit all shareholders equally, with shares trading at a fair price -- but I'm not. I suggest individual investors pass on looking at Caesars Entertainment Corp. in favor of situations that are safer and easier to analyze.