Wednesday, February 18, 2009

George Soros Increases Stakes in Potash (POT) & Petrobras (PBR); Culls Walmart (WMT) and Research in Motion (RIMM)

It is funny - there was once a time you wanted to see your positions on the sheets of the major hedge fund players. That was before 2nd half 2008 when you see the damage that the whales do when they all rush out of positions at once due to forced selling and leverage!

George Soros is one of the more famous "old school" hedge fund managers - he and Jim Rogers (who we quote a lot on the blog) joined together in Quantum Fund to create some serious coin. He is infamous for betting against the British pound in the 80s and "breaking the Bank of England". Interestingly, Soros has sort of taken a more passive role of late (it appears) until latter 2008 when funds under his arms were not doing so great, so he rolled up his sleeves and got much more involved; and was able to turn the ship.
  • Soros’s firm oversees $21 billion. Its Quantum Endowment Fund returned 8 percent last year.
Ironically, Soros called for quite the huge financial crisis [Jan 22, 2008: Soros Says World Faces Worst Financial Crisis Since World War II] but even he, by his own admission, underestimated [Apr 9, 2008: Soros Believes Global Subprime Costs to Reach $1 Trillion] just how bad it would turn out.

Per Bloomberg, it appears Soros is of like mind with Jim Rogers in focusing again on commodities, including fertilizer maker Potash (POT) which we hold. Potash has the largest potential reserves in potash (the "hardest to get to" nutrient in fertilizer) of publicly traded companies and Petrobras (PBR) has the largest potential reserves in crude of publicly traded companies. So you see a theme here, but these sound like (gasp) long term investments... rather than the daytrade of the week that seems to dominate this market.
  • Billionaire investor George Soros’s hedge-fund firm bought more shares of Petroleo Brasileiro SA and Potash Corp. of Saskatchewan Inc. in the fourth quarter, almost doubling its holdings. The purchases made Soros the second-biggest shareholder in the U.S.-traded shares of Petrobras, Brazil’s state-controlled oil company. Soros Fund is the eighth-biggest holder in shares of the Saskatoon, Saskatchewan- based company.
  • Soros Fund Management LLC bought 16 million shares of the Petrobras’ U.S. traded shares, bringing its stake to 1.45 percent, according to a filing today with the U.S. Securities and Exchange Commission. The New York-based firm increased its holdings in Potash by 2.6 million shares to 2 percent in the fourth quarter. Petrobras and Potash are now the firm’s two biggest reported U.S. stocks.
He also added quite a bit to Best Buy (BBY) and one of our hold names, Mexican homebuilder Homex (HXM) (that's the shortened version of the name). While I don't like Best Buy much in the short run, in the long run you can at least make an arguement it's top competitor just bit the dust.
  • Soros Fund added 9 million shares of Best Buy Co., bringing its stake to 2.3 percent of the electronics retailer. The firm also started a new position in Desarrolladora Homex SA de C.V., the Mexican homebuilder, bringing its holdings to 4.9 percent of U.S.-traded shares, according to data compiled by Bloomberg.
Now one disadvantage as small guys is we don't sit on the desk of Goldman or Morgan or whomever the prime broker is for major funds - so we don't hear the "leaks" of "hey Heebner is buying this... " or "Soros is selling that...." But if you look at the weakness of Walmart (WMT) of late I wonder if Soros' exit had anything to do with it - "hey if Soros is selling there must be something to it"
  • Soros’s hedge-fund firm sold 3 million shares of Wal-Mart Inc., bringing its stake in the discount retailer to 0.01 percent. The firm also sold all of its 2 million shares in Research In Motion Ltd., the maker of the Blackberry phone.
[Nov 26, 2008: Soros and Citadel Building up Coal Stakes]

Long Potash in fund; no personal position

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