George Soros started his noteworthy careers in 1970 when he co-founded the Quantum Fund with Jim Rogers, who is also a Guru on Gurufocus.com. His returns were remarkable yielding 3,365% from 1970-1980. 3,365%, or 42.5% per year for 10 years is quite a feat. His most famous investment actually was a currency investment when he sold short ten billion dollars worth of British Pounds. He profited from the Bank of England’s hesitance to raise its interest rates or float its currency to the public.
In the end, the Bank of England was forced to take the Pound out of the European Ex-change Rate Mechanism and to essentially devalue the pound sterling. From this currency trade along, Soros earned an estimated 1.1 billion dollars. From that day on he was known as “the man who broke the Bank of England.”
Today the “man who broke the Bank of England” has seemed to have taken on some positions in his stock portfolio today that most likely reflect his views on the economy and the price of commodities as Soros tends to invest based on economic indicators.
As of this writing Soros’ top ten positions in his portfolio are Companhia Vale do Rio Doce (RIO, Financial) , JetBlue Airways (JBLU, Financial), QUALCOMM (QCOM, Financial), Halliburton (HAL, Financial), Bluefly Inc. (BFLY), an S&P 500 Index Fund (SPY), CVS (CVS, Financial), Auxilium Pharmaceuticals (AUXL) Inc., Marathon Acquisition (MAQ-U), Archer-Daniels Midland (ADM, Financial), and Level 3 Communications (LVLT, Financial).
Companhia Vale do Rio Doce (RIO) 16.15%:
Companhia Vale do Rio Doce (RIO) is a diversified Brazilian metals and mining company. It produces, exports, and supplies different metals to companies. This company will move with the price of the overall metal futures market. Obviously Soros is making a bet on the future of metal prices worldwide. With almost 16% of his portfolio in the company he is making a pretty huge bet. His initial buy was at around 25 dollars to 32 dollars on March 31, 2006. Soros increased his position by 1400% in December of the same year at a price of 21 dollars to 20 dollars per share. Soros is obviously bullish on the metal bull market to continue and I would not bet against Soros.
JetBlue Airways (JBLU) 4.74%:
JetBlue Airways (JBLU) is one of the major airlines in the United States. While it is best of breed, the company is facing hard times as the airline industry is a mess. It is worth noting that 2007 is the first year in a while when no major airline was in bankruptcy. Historically, the airline industry has had pretty poor economics and I don’t see any signs of that permanently clearing up. With the price of oil going up and profits getting squeezed I would stay away from this com-pany. So far Soros seems to be wrong on this one as he bought in at 11 dollars to 16 dollars per share and is down 24% from his cost average.
QUALCOMM (QCOM) 4.39%:
QUALCOMM (QCOM) is in the business of designing, developing, manufacturing, and market-ing digital wireless telecommunication devices and services. This was a favorite mutual fund stock in during the 90’s all the way through the tech bubble. It also has survived which says something about the merits of the company. It is an extremely profitable company with over 30% profit margins and more than 18% returns on their equity. They are virtually debt free mak-ing this company prepared for a downturn. At nearly 30x earnings I would stay the company is not cheap and most likely fairly priced. Of course earnings could grow faster than expectations and the company could have some nice surprises along the way. Soros originally bought shares at 33 dollars to 38 dollars in September of 2006. He increased his position by 141% in December of 2006 at a price of 35 dollars to 39 dollars per share and then increased his posi-tion by another 56% in March of 2007 at a price of 37 dollars per share to 43 dollars per share.
Halliburton (HAL) 3.02%:
Halliburton (HAL) is notorious for being an evil company affiliated with the Bush administration. While the affiliation with the current presidential administration may or may not be overdone the stock has undoubtedly done very well over the last couple of years. Halliburton (HAL) being an oil services stock is directly tied to how the oil markets do. If the price of oil is high more oil companies will hire companies such as Halliburton (HAL) and vice versa. Soros originally bought shares for 27 dollars to 33 dollars in December of 2006. So far he has been right on the money as his shares are up 13%. With this not being his only commodities investment let alone oil investment this should say something about the economic predictions of George Soros.
Bluefly Inc (BFLY) 2.05%:
Bluefly (BFLY) is an Internet retailer of designer apparel, accessories, as well as home furnish-ings. Soros originally bought shares at 0.70 cents to a little over a dollar. He is currently up 3% from when he bought shares in June of 2006. The company has never been very profitable and as of today is still not making a dime. I am not sure what Soros sees in the company and is more of a speculative play. I would pass on this stock as it really has no proven track record.
S&P500 Index Fund (SPY) 1.66%:
The S&P500 Index Fund is a direct investment in the S&P500. If the index is up 1% the index fund will follow in its path. Soros’ investment in the S&P500 Index fund is a direct statement that he believes in the long term prospects for the United States economy is very good. With very few companies trading below net working capital and a fairly high average P/E ratio for the mar-ket I would stay away from this fund. If you are putting money away in an IRA and dollar cost average an index fund, I wouldn’t stop. Soros bought in at a price of $138.12-$145.15 in March of this year.
CVS (CVS) 1.51%:
CVS (CVS) is a pharmacy that competes directly with Walgreen’s. Soros originally bought shares in December of 2006 at a price of $27.93 - $31.20. He then sold half his position in March 2007 at a price of $30.89 - $34.51. Today CVS (CVS) currently trades at roughly 20x earnings and 1.25x sales. With modest profitability, CVS (CVS) should do fine in one’s portfolio but at today’s prices it isn’t screaming cheap.
Auxillium Pharmaceuticals 1.41%:
Auxillium Pharmaceuticals is a bio-pharmaceutical company which is not very profitable. Soros has been reducing his position as he sold 40% of his shares in December of 2006 at a price of $14.47 and then reduced his position by another 38% in a few weeks later at a price of $11.25-$17.43 a share. This is a very risky stock and for someone who is risk averse should probably avoid this company. Soros selling might be an indicator as well.
Marathon Acquisition (MAQ-U) 1.39%:
Marathon Acquisition (MAQ-U) is a blank check company. A blank check company is one that has a lot of cash and it’s sole purpose is to find a company to acquire. Soros probably has some idea of the management as cash is meaningless unless it is put to good use. Unless you really know a lot about the management of the company I would avoid it at all costs. There is no information as to what price paid for his 3,750,000 units. But he acquired a position in March of 2007. It is interesting to note that Seth Klarman has also taken a position in this obscure secu-rity.
Archer-Daniels Midland (ADM) 1.27%:
Archer-Daniels is in the business of storing and processing agricultural commodities. The com-pany has three units: Oilseeds Processing, Corn Processing, and Agricultural Services. Again, this is another economic play in the long term picture for the prices of agricultural commodities such as corn and wheat. Obviously Soros is bulling not just on oil and metals but also on agri-cultural commodities as well as the price of the stock will move accordingly to agricultural com-modity prices. Soros acquired his stake in March of 2007 at a price of $30.76 - $36.72 a share.
Level 3 Communications (LVLT) 1.17%:
Level 3 is a telecommunications business. The company was very profitable in the boom years of the 90’s but got terribly hurt due to over investment in the telecom industry where essentially their inventory became almost worthless overnight. Recently the telecom industry has been making a comeback and Soros believes it will still continue as he recently bought shares in March of this year at a price of $5.93 - $6.60.
George Soros is a very different type of investor. He finds value by predicting economic trends remarkably accurately. To try to invest the way he does on one’s own is nearly impossible as almost everyone who tries fails to do as well as him. The best bet is to learn what he owns so you can better guess his economic predictions. From his top ten holdings one can conclude he believes we are still in a bull market for commodities and that the telecom industry is still in an upswing to recovery.
In the end, the Bank of England was forced to take the Pound out of the European Ex-change Rate Mechanism and to essentially devalue the pound sterling. From this currency trade along, Soros earned an estimated 1.1 billion dollars. From that day on he was known as “the man who broke the Bank of England.”
Today the “man who broke the Bank of England” has seemed to have taken on some positions in his stock portfolio today that most likely reflect his views on the economy and the price of commodities as Soros tends to invest based on economic indicators.
As of this writing Soros’ top ten positions in his portfolio are Companhia Vale do Rio Doce (RIO, Financial) , JetBlue Airways (JBLU, Financial), QUALCOMM (QCOM, Financial), Halliburton (HAL, Financial), Bluefly Inc. (BFLY), an S&P 500 Index Fund (SPY), CVS (CVS, Financial), Auxilium Pharmaceuticals (AUXL) Inc., Marathon Acquisition (MAQ-U), Archer-Daniels Midland (ADM, Financial), and Level 3 Communications (LVLT, Financial).
Companhia Vale do Rio Doce (RIO) 16.15%:
Companhia Vale do Rio Doce (RIO) is a diversified Brazilian metals and mining company. It produces, exports, and supplies different metals to companies. This company will move with the price of the overall metal futures market. Obviously Soros is making a bet on the future of metal prices worldwide. With almost 16% of his portfolio in the company he is making a pretty huge bet. His initial buy was at around 25 dollars to 32 dollars on March 31, 2006. Soros increased his position by 1400% in December of the same year at a price of 21 dollars to 20 dollars per share. Soros is obviously bullish on the metal bull market to continue and I would not bet against Soros.
JetBlue Airways (JBLU) 4.74%:
JetBlue Airways (JBLU) is one of the major airlines in the United States. While it is best of breed, the company is facing hard times as the airline industry is a mess. It is worth noting that 2007 is the first year in a while when no major airline was in bankruptcy. Historically, the airline industry has had pretty poor economics and I don’t see any signs of that permanently clearing up. With the price of oil going up and profits getting squeezed I would stay away from this com-pany. So far Soros seems to be wrong on this one as he bought in at 11 dollars to 16 dollars per share and is down 24% from his cost average.
QUALCOMM (QCOM) 4.39%:
QUALCOMM (QCOM) is in the business of designing, developing, manufacturing, and market-ing digital wireless telecommunication devices and services. This was a favorite mutual fund stock in during the 90’s all the way through the tech bubble. It also has survived which says something about the merits of the company. It is an extremely profitable company with over 30% profit margins and more than 18% returns on their equity. They are virtually debt free mak-ing this company prepared for a downturn. At nearly 30x earnings I would stay the company is not cheap and most likely fairly priced. Of course earnings could grow faster than expectations and the company could have some nice surprises along the way. Soros originally bought shares at 33 dollars to 38 dollars in September of 2006. He increased his position by 141% in December of 2006 at a price of 35 dollars to 39 dollars per share and then increased his posi-tion by another 56% in March of 2007 at a price of 37 dollars per share to 43 dollars per share.
Halliburton (HAL) 3.02%:
Halliburton (HAL) is notorious for being an evil company affiliated with the Bush administration. While the affiliation with the current presidential administration may or may not be overdone the stock has undoubtedly done very well over the last couple of years. Halliburton (HAL) being an oil services stock is directly tied to how the oil markets do. If the price of oil is high more oil companies will hire companies such as Halliburton (HAL) and vice versa. Soros originally bought shares for 27 dollars to 33 dollars in December of 2006. So far he has been right on the money as his shares are up 13%. With this not being his only commodities investment let alone oil investment this should say something about the economic predictions of George Soros.
Bluefly Inc (BFLY) 2.05%:
Bluefly (BFLY) is an Internet retailer of designer apparel, accessories, as well as home furnish-ings. Soros originally bought shares at 0.70 cents to a little over a dollar. He is currently up 3% from when he bought shares in June of 2006. The company has never been very profitable and as of today is still not making a dime. I am not sure what Soros sees in the company and is more of a speculative play. I would pass on this stock as it really has no proven track record.
S&P500 Index Fund (SPY) 1.66%:
The S&P500 Index Fund is a direct investment in the S&P500. If the index is up 1% the index fund will follow in its path. Soros’ investment in the S&P500 Index fund is a direct statement that he believes in the long term prospects for the United States economy is very good. With very few companies trading below net working capital and a fairly high average P/E ratio for the mar-ket I would stay away from this fund. If you are putting money away in an IRA and dollar cost average an index fund, I wouldn’t stop. Soros bought in at a price of $138.12-$145.15 in March of this year.
CVS (CVS) 1.51%:
CVS (CVS) is a pharmacy that competes directly with Walgreen’s. Soros originally bought shares in December of 2006 at a price of $27.93 - $31.20. He then sold half his position in March 2007 at a price of $30.89 - $34.51. Today CVS (CVS) currently trades at roughly 20x earnings and 1.25x sales. With modest profitability, CVS (CVS) should do fine in one’s portfolio but at today’s prices it isn’t screaming cheap.
Auxillium Pharmaceuticals 1.41%:
Auxillium Pharmaceuticals is a bio-pharmaceutical company which is not very profitable. Soros has been reducing his position as he sold 40% of his shares in December of 2006 at a price of $14.47 and then reduced his position by another 38% in a few weeks later at a price of $11.25-$17.43 a share. This is a very risky stock and for someone who is risk averse should probably avoid this company. Soros selling might be an indicator as well.
Marathon Acquisition (MAQ-U) 1.39%:
Marathon Acquisition (MAQ-U) is a blank check company. A blank check company is one that has a lot of cash and it’s sole purpose is to find a company to acquire. Soros probably has some idea of the management as cash is meaningless unless it is put to good use. Unless you really know a lot about the management of the company I would avoid it at all costs. There is no information as to what price paid for his 3,750,000 units. But he acquired a position in March of 2007. It is interesting to note that Seth Klarman has also taken a position in this obscure secu-rity.
Archer-Daniels Midland (ADM) 1.27%:
Archer-Daniels is in the business of storing and processing agricultural commodities. The com-pany has three units: Oilseeds Processing, Corn Processing, and Agricultural Services. Again, this is another economic play in the long term picture for the prices of agricultural commodities such as corn and wheat. Obviously Soros is bulling not just on oil and metals but also on agri-cultural commodities as well as the price of the stock will move accordingly to agricultural com-modity prices. Soros acquired his stake in March of 2007 at a price of $30.76 - $36.72 a share.
Level 3 Communications (LVLT) 1.17%:
Level 3 is a telecommunications business. The company was very profitable in the boom years of the 90’s but got terribly hurt due to over investment in the telecom industry where essentially their inventory became almost worthless overnight. Recently the telecom industry has been making a comeback and Soros believes it will still continue as he recently bought shares in March of this year at a price of $5.93 - $6.60.
George Soros is a very different type of investor. He finds value by predicting economic trends remarkably accurately. To try to invest the way he does on one’s own is nearly impossible as almost everyone who tries fails to do as well as him. The best bet is to learn what he owns so you can better guess his economic predictions. From his top ten holdings one can conclude he believes we are still in a bull market for commodities and that the telecom industry is still in an upswing to recovery.
