Wednesday, February 17, 2010

Quarterly Update: George Soros Calls Gold (GLD) a Bubble; Then Stocks Up on It

It's that time of year, where once a quarter we get to see what the "gurus" are doing.  This has become a favorite for the Wall Street community because if there is one thing big money likes... it's group think!  There are only a handful of 'whales' I normally will discuss on the blog, and George Soros is one of those guys.  The wily hedge fund legend was seen in the past few months talking down gold (GLD) [etf) and calling it a "bubble".  Yet what was George doing in the fourth quarter?  Doubling his stake.  So either he changed his mind in January 2010, or he was doing the opposite of what most people do... that is talking up their book.  I suppose 2 other options are: (1) he thinks gold is a bubble but he is happy to partake or (2) by using the word 'ultimate' bubble, he means gold will be the last and final major bubble after what might be happening in the decade to come as central banks and government desperate to inflate away their debts print fiat money like mad. Should be an interesting update 3 months from now to see what he did with his gold stake.

Soros joins John Paulson in building up a stake in Citigroup (C), which I suppose with the US taxpayer's protection is now a "can't miss" investment ("free market capitalism" and all), along with his normal names - the big telecom providers: VZ & T.  His stake in Petrobras (PBR) was not much changed; this appears to normally be his 'trading stock' which he swings in and out of every quarter. An interesting large foray this past quarter was into a stock I think has a heck of a moat around its business, Monsanto (MON).  Soros also appears to have completely dumped the top stock from his Q3 2009 holdings, Potash (POT). [Nov 17, 2009: George Soros Reveals Stake in Ford (F), Adds to Walmart (WMT), Cuts Position in Petrobras (PBR)]  He also continues to build his stake in Ford (F).

Via Reuters:
  • Billionaire investor George Soros' hedge fund more than doubled its bet on the price of gold during the fourth quarter, a portion of the firm's total U.S.-listed equity holdings of $8.8 billion at the end of 2009.  Soros Fund Management owned 6.2 million shares of SPDR Gold Trust (GLD) at the end of the year worth $663 million. That was up from 2.5 million shares at the end of the third quarter.
  • The New York-based firm also disclosed in a filing on Tuesday with the U.S. Securities and Exchange Commission that it bought almost 95 million shares of Citigroup (C) during the quarter, worth $313 million by the end of the year. Soros reported no holdings of the troubled bank's shares at the end of the third quarter.
  • Soros and other noted investors like John Paulson have previously touted gold as a hedge against inflation, further economic turmoil or a decline in the value of the U.S. dollar. Last month at the World Economic Forum in Davos, Soros said "the ultimate asset bubble is gold," but he declined to say whether he was investing in the precious metal.
  • The filing for the end of the fourth quarter revealed no listing for Canadian chemicals manufacturer Potash Corp of Saskatchewan (POT), Soros' largest holding at the end of the third quarter.
  • Soros' most recent SEC filing also revealed large bets on seed producer Monsanto (MON) and Brazilian gas and oil giant Petroleo Brasileiro (PBR) also known as Petrobras. The firm held 3.9 million shares of Monsanto at the end of the fourth quarter, up from 1.1 million three months earlier.  Soros also reported a stake of 7.7 million shares of Petrobras's U.S. ADRs, worth $369 million, and a slight increase from the 7.4 million receipts held at the end of the third quarter. Soros had another 5.9 million shares of nonvoting ADRs worth $249 million, virtually unchanged from his holding three months earlier.
  • Soros Fund Management raised its holding in carmaker Ford Motor Co (F) to 10.9 million shares from 7.3 million shares at the end of the third quarter, when Soros started to accumulate his position.
[Oct 26, 2009: George Soros Interview with Financial times - October 2009]
[Jul 9, 2009: WSJ - Latest Picks from John Paulson and George Soros]
[Apr 7, 2009: George Soros on Yahoo Tech Ticker]
[Mar 31, 2009: UK Times: George Soros Sees Global Meltdown]
[Feb 23, 2009: George Soros - This is the End of the Free Market Era; Situation Similar to Disintegration of Soviet Union]
[Feb 18, 2009: George Soros Increases Stakes in Potash & Petrobas]
[Jan 28, 2009: Roubini & Soros on Bad Bank]
[Apr 9, 2008: Soros Believes Global Subprime Costs to Reach $1 Trillion]
[Jan 22, 2008: Soros Says World Faces Worst Financial Crisis Since World War II]

Long Potash in fund; no personal position

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