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George Soros Wants to Make a Lot of Money in European Banks

June 23, 2014 | About:

In this article let's take a look at George Soros (Trades, Portfolio), who is recognized for having the best performance record of any investment fund in the world over its 26-year history. Since 1969, when Soros established the Quantum Fund, he achieved a cumulative 32% annual return.

Soros has decided to raise the bet on Spain, to gain 0.5% Liberbank S.A. (LBK.MC) in an operation valued at 5 million euros. Liberbank, which took rescue funds during Spain's financial crisis, in June completed a 475 million euro ($645 million) capital hike, so it can repay debt and bolster its finances. "There were about 20 anglo-saxon funds who bought into (the operation), and Soros was among those," a spokesman of the company said, adding that the U.S. investor's holding represented between 0.5 percent and 1 percent of Liberbank's capital. Spain received 41,300 million euros in 2012 from its European partners to assist weaker financial sector entities, including Liberbank, who needed 124 million euros in the form of convertible bonds into equity.

Moreover, billionaire George Soros (Trades, Portfolio) is among investors who bought shares in February in nationalized lender Bankia SA (BKIA.MC) during a sale by the Spanish government last week, said a person familiar with the information.

Latest Investments

The bet is in addition to other investments of the billionaire, who in just six months has committed 332 million euros for Spanish listed. In December last year, he landed in Spain to buy 3% of FCC at 55 million, and could become the largest shareholder of the group. After FCC, in April this year entered Hispania, the listed company constituted by Azora, with a stake of 17%, valued at 92 million. Further, it acquired 0.02% of Iberdrola (IBE.MC) for 6 million and the aforementioned investment in bankia.

The Next Target

The next target could be back in the financial sector, as the guru leads the pools to take over the mortgage portfolio of Catalunya Banc, with an offer that range between 3,000 and 3,500 million euros.

Other Hedge Fund Gurus

Soros is among investors betting on a Spanish recovery by buying shares in banks and real estate. Also, the hedge fund Paulson & Co., founded by John Paulson (Trades, Portfolio), is investing in a Spanish real estate company: Hispania Activos Inmobiliarios, which plans to raise as much as 550 million euros in an initial public offering, according to a prospectus published a few days ago.

Final Comment

In the article we focus on the famous American finance tycoon, George Soros (Trades, Portfolio), who is known for his major influence on investing policy and skill in the markets, who is seeking opportunities in Spain, as expansion seems to consolidate. Soros recently invested on Bankia, a symbol of the European crisis, buying shares in February when the government started selling down its majority stake. Later on, he confirmed he was expecting to make a lot of money in Europe, for example, putting money in banks that need capital urgently. Liberbank is the latest Spanish bank to seek investor help to bolster its capital. The bank shares rose in the Spanish market after the newspaper The Economist publish Soros investment.

Disclosure: Omar Venerio holds no position in any stocks mentioned.

About the author:

Omar Venerio is capital markets, derivatives, corporate finance and financial management professor. He is passionate about the stock market and providing independent fundamental research and hedge fund and insider trading-focused investigation.

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