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Soros Flying High on Airlines Around the World

January 06, 2006
by Alex S. Gabor

In 2000 George Soros, through his Quantum Industrial Partners Fund, his Open Society Institute and his own personal holdings invested in Jet Blue Airways. Almost five years later he gradually sold some of his stake at an average price of $24 per share. To date he controls directly or indirectly about 11 million shares or about 7% of the total issued and outstanding.

When Jet Blue went public in 2002, the principal business address of Quantum Industrial Partners LDC ("QIP") was Kaya Flamboyan 9, Willemsted, Curacao, Netherlands Antilles. Prior to the public offering Soros Fund Groups owned 18% of the voting stock of Jet Blue Airways.

QIH Management Investor, L.P. ("QIHMI") was the managing member of QIP and QIH Management, Inc. ("QIH Management") was the sole general partner of QIHMI.

QIHMI, by reason of its investment discretion over the shares owned by QIP, and QIH Management, was the sole general partner of QIHMI, and were each deemed the beneficial owners of the shares held for the account of QIP.

George Soros, the sole owner of QIH Management had then agreed to cause it to act at the direction of Soros Fund Management LLC ("SFM"), of which he is Chairman.

Accordingly, each of SFM and Mr. Soros has the ability to direct investment decisions concerning shares held for the account of QIP, and as such each of them may also be deemed to be the beneficial owner of such shares.

As you can see from the above not uncommon corporate structure used by most well healed international investors, there are five layers of corporate entities which are strewn around the world in various tax havens to protect Soros from any type of legal entanglements. The cost of maintaining such legal structures could exceed $100,000 annually making many lawyers very happy with George Soros and his movement of funds around the planet.

More recently Soros has been involved in the Asian markets with Hainan Airlines which recently chose Logan International Airport for its first direct U.S. flights. Soros Funds own 14% of Hainan which has recently committed to buying $350 million of new aircraft from Boeing which won't be delivered until at least 2008. Hainan is the fourth largest airline in China and continues to negotiate the purchase of a 60% stake in regional carrier CR Airways.

There has been some speculation that Soros might seek to marry Hainan and Jet Blue at some distant point in the future, creating a new global carrier with direct ties to China, but Soros has not been the hostile takeover or merger specialist type of investor, so such speculations are purely hubris according to one analyst.

Soros of late has been flying from country to country on a recent tour in Eastern Europe and most recently a visit to Indonesia.

Soros, as Chairman of Soros Fund Management, has repeatedly denied allegations that he was behind the Asian economic crisis in 1998 which caused the fall of former President Soeharto in Indonesia.

"That accusation is totally groundless. I have no right or authority to use my money for political purposes," he said at a meeting with chief media editors in Jakarta during a press conference at his first ever visit to Indonesia

That statement would contradict his recent investments in political organizations in the United States where he invested millions of dollars in attempts to defeat George Bush, but on the whole acted more as a giant publicity campaign for both Bush and Soros. That apparent conflict generated a tremendous amount of global press coverage, better than spending a billion dollars on marketing and advertising.

"My purpose is already clear, namely promoting the creation of an open society and democracy. In Indonesia, I do it through Tifa foundation," Soros has said.

As a capitalist, Soros said his main purpose was to make money which he uses to support an open society and democratization. He has formed a global network of foundations to help him achieve his goals. Some of those Foundations and NGO's also invest alongside his industrial investment companies in such stocks as Jet Blue.

Having experienced life under the Nazi and communist regimes as a child, Soros had come to the conclusion it was necessary to develop the values of an open society such as have become the foundations of the American people and democratic system, but America today is increasingly less open and its government has become more and more secretive during the development of the war on terrorism.

"Mahathir was my publicity machine. He had made a big blunder, but his accusation has actually made me popular," he said at the meeting attended by top journalists, politicians and businessmen in Jakarta. Perhaps it was this same reverse psychology which Soros used to get George Bush inadvertently reelected in the 2004 election.

He said those who control the financial system are the country's monetary authority while he was just a market player. The power to control a country's financial affairs is in the hands of the central bankers while he could only watch and take action on the basis of market developments.

But it was one of his own mentors, Karl Popper who pointed out the fallacies of false reflexive perceptions, and it was Rothschild, who said, "Give me the power to issue a nations currency and I care not who makes the laws." Soros and his organizations are very well connected to intelligence from Central Bankers and have been for decades.

Soros has put some of his massive fortune into press groups like Investigative Reporters & Editors (IRE), the Fund for Investigative Journalism and the Center for Investigative Reporting according to some people who follow Soros around the world watching his every move.

As his more recent investments in Asia point out, Soros is still betting that the Asian markets are better growth areas than the United States and Europe, although he maintains fingers in every pie across international lines through his thousands of investment vehicles, partnerships , capital and investment funds.

In the past George Soros sought to play the macro imbalances, as he rode through a bad bet against the yen, lost billions in Russia under market reforms there, and most recently bet heavily on the tech sector in the United States.

What makes Soros a controversial financier and thinker is his independence which many high brow organizations disdain. He is said to have coined the term "market fundamentalism" to criticize the assumption that an unfettered Adam Smith's hand rules global capitalism for the better.

His thinking favors mechanisms for introducing stability to mitigate the free flow of funds, as something that should not rely overly on the state system. But these statements which may not have come from Soros himself, but rather his own critics contradict the open society philosophy and may as well be reflexive, portraying the truth that no government has a monopoly on the truth itself.

Soros takes the view that global markets require international institutions capable of sustaining them. The reform of economic institutions such as the WTO the IMF, the World Bank, and other monetary based unions involved in centralized banking operations therefore are needed. Tied to this, governments need to cooperate to deliver "global public goods", such as the preservation of peace, the alleviation of poverty and protection of the environment and human rights.

In Asia, governments that have tried to command the market have collapsed, only to be replaced by more coercive governments, and others which tried to ignore it have found themselves in a financial morass requiring international institutions to bail them out. Many have also limited interstate cooperation for fear of compromising their sovereignty but in this day and age, international investing requires the sage philosophy of understanding that this world is totally interconnected and what is done in one market certainly can impact others around the globe.

We cannot easily predict what lies ahead in 2006. But open societies with more responsive and accountable governments, as well as better structured, inclusive and open markets, will prove more resilient and capable in dealing with whatever comes as the progressive party line goes, but one thing is certain, if Asia sneezes, the United States will certainly catch a feverish cold spell.

Soros will be in Singapore where the Institute of International Affairs is hosting a talk by Mr George Soros on Monday at the Singapore Stock Exchange.

Alex S. Gabor is a journalist and film maker working on his most recent pet project "Soros and Me", a documentary about his own delusions about wealth and grandeur and their relationship to George Soros.

Rating: 3.0/5 (6 votes)

Comments

AlexGabor
AlexGabor - 8 years ago
Following up on the previous story, the following article appeared on Forbes Web site:

China's budget carrier Lucky Air to launch maiden flight before end of month

01.09.2006, 03:29 AM

BEIJING (AFX) - Hainan Airlines (SHA 600221; SHB 900945), in which US-financier George Soros holds an indirect stake, said its subsidiary Lucky Air Co Ltd is expected to launch its maiden flight before the end of January.

In a report on its website, Hainan Airlines cited Lucky Air chief executive Ma Guohua as saying the newly formed carrier will become 'a real budget carrier operating regional routes at low cost'.

China's fourth-largest airline Hainan Airlines owns a 67.95 pct stake in Lucky Air, which is based in Dali Airport in the southern province of Yunnan.

George Soros holds an indirect stake in Hainan Air through his investment vehicle American Aviation.

Lucky Air has received approval to lease three B737s from Hainan Airlines' unit Shanxi Airlines for its operations.

derek.jiang@xinhuafinance.com
AlexGabor
AlexGabor - 8 years ago
Soros may just be reconsidering his technology stocks positions right at the moment.

The issue of "click fraud" is slowly coming to the surface on the subject of two stocks I have been keenly following lately. One is SOLD and the other is GOOG, both of which I picked as great shorting opportunities for reasons I cannot at this time fully disclose, but for which enough evidence exists online if one does even a slight cursory bit of research.

One thing is for certain, if you had shorted GOOG at the beginning of the year at around $400 to $475 using an options trading strategy, and closed out your position yesterday, you would have made a very large killing.

On paper I had shorted roughly 100 million shares of GOOG at various prices as it ramped up from $400 to $470 and covered all my short positions at $395 less than 30 days later. That's an $800 million dollar profit without using options.

This was in the face of huge criticism at such web sites as Raging Bull, Silicon Investor and Investorshub as the Bulls kept pounding me with their "facts".

Still doesn't beat any world records and of course it was a paper trade, but there may yet come a day when someone will beat George Soros single week profit on trades of $1 billion.

Now if George Soros would call me to discuss the strategy of how I will help him become the worlds real first trillionaire we could get down to some real house cleaning in America.

That is how much of a discount there is from my view in terms of "Integrity Premium". In other words there is an opportunity out there for one person to make a trillion dollars in one day and shatter the world record, but in orchestrating such a trade, you would have to time it with the shattering of the U.S. economy which many contrarian pundits have been predicting as far back as 1913. There is really only one person in the world who could muster the capital and pull off a trade like that, and that is George Soros.
AlexGabor
AlexGabor - 8 years ago
Google Me This Click Man

By Alex S. Gabor

Google, owner of the most-used Internet search engine, posted fourth-quarter profit that missed many analysts best estimates, snapping a six quarter winning streak that has propelled the stock since it first went public in 2004.

The shares plunged 12.4 percent after the company's 82 percent rise in net income disappointed investors seeking justification for a stock price that has more than doubled in a year.

The Federal Reserve nudged a key interest rate up to the highest level in nearly five years and left the door open for possibly one more rate hike as Alan Greenspan brought his long tenure as chairman to a close. This is a sign that the bears have long been in waiting for the past several months now.

Googles disappointing financial report rattled previously bullish investors, causing Google's stock price to plunge by more than 12 percent in a backlash that wiped out $16 billion in shareholder wealth.

The amount of shareholder wealth shed by Google during a few hours of extended trading exceeded the entire market value of General Motors Corp, which is also suffering from bad U.S. Government economic policies.

The conflagrations of Google's bubble bursting combined with the Fed Chairman's retirement signals the beginning of a new bear market.

Google's long-simmering click-fraud problem could explode into a billion-dollar headache for the Web giant, some Web marketing experts are warning.

In fact, a growing number of Google-watchers claim the search giant is ignoring the click-fraud issue because it's so large.

Click-fraud happens when surfers click on Goggle advertisers with no desire to get to the advertiser's site. Knowing Google charges advertisers based on how many surfers click on their ads, the fraudsters click on the ads simply to drive up the advertiser's costs.

The fraud also falsely inflated Google's potential future earnings. In the same way, U.S. Government statistics on the economy are about as reliable as pre-Iraqi war intelligence about weapons of mass destruction. With Greenspan gone, the long green span of economic expansion is over.

Interest rates will continue to rise to stem the falling dollar in foreign exchange markets and the cost of borrowing by the US government will skyrocket as continued deficit spending for the war will force foreign investors to look to Europe for more stable growth. The Middle East will continue to put pressure on the US consumer by raising oil prices that some analysts predict will hit $270 a barrel within 24 months.

George Soros, Warren Buffet, Bill Gates, Paul Allen, Kirk Kirkorian, Stephen Spielberg, and a growing list of billionaires are resorting to shorting the US dollar as a hedge to maintain their current levels of wealth.

Some foreign governments are losing more confidence in America, considering ways of getting out of the treasury markets before the final bludgeoning of the burgeoning deficit spent national debt maxes out on its' global credit line.

Soros has predicted that by 2007, the entire US real estate industry will be in a triple bind of soaring interest rates, falling sales volumes, and collapsing prices because the Fed raised interest rates too high for too long. The number of homes for sale inventory continues to skyrocket while the refinance market has all but come to a deadening stall.

This does not bode well for builders, mortgage bankers, real estate developers, title companies, and escrow businesses.

Former Wal-Mart Stores vice chairman Tom Coughlin admitted to misappropriating company funds, pleading guilty to five counts of wire fraud and one of tax evasion. The Enron trial begun recently, placing attention of investors back on the reality that American businesses are corrupt to the core.

The retail sector will also be impacted near and long term as the easy credit home equity loan programs come to a screeching halt and borrowers scramble under tighter and tighter credit conditions, while the market absorbs the billions in bad loans already on the books.

The death toll in Iraq will soon exceed 3,000 American dead and 20,000 injured, with 250,000 dead Iraqi humans buried in the desert in mass graves. The army is finding it difficult to recruit young naive souls for its blood machine.

While Bush's approval rating hits below 30%, the worst of any President in the history of keeping track of such statistics, the global approval rating of America is also hitting new lows, and no amount of universal double rhetorical speak by the President will change it.

Like Babylon, Greece, Rome, and Nazi Germany, America is falling, and this story wasn't written by Chicken Little.

Copyright by Alex. S. Gabor

AlexGabor
AlexGabor - 8 years ago
PAAH to invest up to 100 million dollars in Chinese airlines

Beijing: The Pan-American Aviation Holdings Ltd. (PAAH) will invest up to 100 million US dollars to become a shareholder of Grand China Airline (GCA), a subsidiary of the Hainan Airlines, China's fourth largest airline company.

http://www.newkerala.com/news2.php?action=fullnews&id=35642
AlexGabor
AlexGabor - 8 years ago
Pan American Holdings to Invest Up to $100 Million in Newly Established Grand China Airlines, Letter of Intent Signed in Haikou, China, on April 1, 2006

New York, United States -- Business Wire (Business Wire India)

Pan American Holdings, a Cayman Islands-based aircraft investment vehicle, completed its signing protocol in a Letter of Intent (LOI) with Hainan Airlines to invest between $60 million and $100 million, the equivalent of an 11 to 18 percent stake in the airline's new parent company Grand China Airlines (GCA). This protocol included agreement for a down payment and is pending approval of the Ministry of Commerce in Beijing.

If the LOI is approved by the Government, Pan American Holdings will become at least the second largest foreign investor in the new Chinese airline. The largest single investor currently is American Aviation LDC, a George Soros-owned investment vehicle. Bharat Bhise, Director of Pan American Holdings, indicated that full payment of the purchase would be complete by the end of 2006.

According to Hainan Chairman & CEO, Chen Feng, the decision to sell a percentage of Grand China Airlines enables Hainan to better its balance sheet and, in time, to raise funding for its planned listing on the Hong Kong stock exchange.

Grand China Airlines, owner of Hainan Airlines, will also own Hainan's other subsidiaries: Xinhua Airlines, Changan Airlines and Shanxi Airlines. Another pending acquisition is CR Airways, a Hong Kong-based carrier which will likely be part of GCA. Hainan Airlines is based in Haikou, Hainan, People's Republic of China.

It is publicly traded on the Shanghai Stock exchange and has Chinese “A“ shares and foreign “B“ shares, as well as Hong Kong “H“ shares. It is the largest non-government airline in China, and the fourth largest airline of China, including the big three Government airlines China Eastern, China Southern and Air China. Hainan operates a scheduled domestic services network with a fleet of 115 aircraft that includes Boeing 737 and 767 variants, as well as Airbus A319-100 and Boeing 777 and 787 aircraft on order. International flights were launched in 2005.

A former director of Hainan Airlines and now a senior advisor to top management, Mr. Bhise is the CEO of Bravia Capital Partners in New York.

In 1995, Mr. Bhise led the effort for the Soros investment vehicle to purchase a stake in Hainan Airlines, which positioned Mr. Soros as the largest investor in the airline at 25 percent.

After subsequent share offerings, the Soros-controlled percentage was reduced to 14.8 percent. This transaction was completed within Mr. Bhise's role as President of C-S Aviation, at that time.


http://www.ndtvprofit.com/homepage/monitor.asp?id=580



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