George Soros is a hedge fund guru, known for stellar success of his Quantum Fund. A mere $1000 invested in 1969 when Soros established the Quantum Fund would have been worth $4 million by the year 2000. During that time he achieved an average 32% annual return. We like to track Soros because of his macro-sense of world economy.
Until August of 2007, George Soros had focused on philanthropy, philosophy, and politics. The stock crisis of 2007-2008 brought Soros back into direct management of his funds. In his book The New Paradigm for Financial Markets, Soros wrote, solving the financial crisis would require us âto bring back some of the regulations that were put in place after the Great Depression and then eroded in the decades that followed.â He stated that free, self-correcting, and non-regulated markets are wrong. âMarkets are flawed. They reflect human delusions of certainty.â He is a believer of reflexivity, which means no investor can have infallible knowledge. The turbulence in the open market reflects the turbulence in human thought.
Sorosâs latest interviews: âThe economic freefall has been stopped, the collapse of the financial system averted. National economic stimulus programs are starting to take effect. The downward dynamic is easing.â As the worldâs third largest economy, China will be one of the positive pushers. Soros says China is a third of the U.S. economy; it cannot replace the American consumer as the motor of global economy. Growth will happen, but will be slower.
George Soros discusses his 2008 portfolio performance:
Soros Fund Management LLC holds positions in over 200 companies, with a total portfolio value of $2.61 billion. Nearly half the fund is invested in oil & gas (other weightings since June â09). Quoting Wall Street Journal, â[T]he firm's assets across all types of investments grew by 41% to $24 billion from July 2008 to July 2009, according to a survey by industry publication AR.â
These are the fastest growing Soros stocks: Petroleo Brasileiro S.A.Petrobras (PBR-A), Fomento Economico Mexicano S.A.B. de C.V (FMX, Financial), Stone Energy Corp. (SGY, Financial), Steel Dynamics Inc. (STLD, Financial), SK Telecom Co. Ltd. (SKM, Financial).
The South American oil giant sold $4 billion in bonds in a two part debt sale. The sale is the largest bond issued by a Brazilian company. Company officials announced that PBR will prioritize natural gas for their domestic markets ahead of exports.
George Soros bought 5,884,700 shares in the quarter that ended in June 2009, which is 7.53% of the $2.61 billion portfolio of Soros Fund Management LLC. Compared to 2008 portfolio weightings, Soros has reduced his position in PBR from 19.53% to 7.53%.
The beer beverage company announced that they are expected to post 29% increase in 3Q profits on soft drink sales and store expansions. The company earned $193 million between July and September. FMX plans to raise beer prices 11% to compensate tax increase.
George Soros bought 9,900 shares in the quarter that ended in June 2009, which is 0.01% of the $2.61 billion portfolio of Soros Fund Management LLC.
The oil and gas company expects higher third quarter production for the third quarter. The company also said its borrowing base will remain at $425 million. As of Sept. 30, Stone Energy had $250 million in borrowings outstanding on its credit facility and another $69 million in outstanding letters of credit. Its cash position was about $97 million.
George Soros bought 550,000 shares in the quarter that ended in June 2009, which is 0.16% of the $2.61 billion portfolio of Soros Fund Management LLC.
The company says production will be lower for the fourth quarter as scrap metal prices decline and construction sector weaken. Steel Dynamics says 3Q income fell 64% to $69 million compared to $193 million 3Q of 2008. Revenue decline 54% to $1.17 billion from $2.56 billion during the prior yearâs 3Q. Mindful, pricing reached historical peaks in the 2008 third quarter.
George Soros bought 200,000 shares in the quarter that ended in June 2009, which is 0.11% of the $2.61 billion portfolio of Soros Fund Management LLC.
October, the telecom company sold its stake in China Unicom for $1.3 billion. In 2006, SK Telecom bought $1 billion worth of bonds in China Unicom in an effort to expand into the Chinese mobile market. Last year, SK Telecom also left the U.S. mobile business when it sold struggling Helio to Virgin Mobile.
George Soros bought 12,200 shares in the quarter that ended in June 2009, which is 0.01% of the $2.61 billion portfolio of Soros Fund Management LLC.
Sources:
George Soros Interview (Oct 2009)
The New Paradigm for Financial Markets: The Credit Crisis of 2008 And What It Means
http://www.georgesoros.com/interviews
Until August of 2007, George Soros had focused on philanthropy, philosophy, and politics. The stock crisis of 2007-2008 brought Soros back into direct management of his funds. In his book The New Paradigm for Financial Markets, Soros wrote, solving the financial crisis would require us âto bring back some of the regulations that were put in place after the Great Depression and then eroded in the decades that followed.â He stated that free, self-correcting, and non-regulated markets are wrong. âMarkets are flawed. They reflect human delusions of certainty.â He is a believer of reflexivity, which means no investor can have infallible knowledge. The turbulence in the open market reflects the turbulence in human thought.
Sorosâs latest interviews: âThe economic freefall has been stopped, the collapse of the financial system averted. National economic stimulus programs are starting to take effect. The downward dynamic is easing.â As the worldâs third largest economy, China will be one of the positive pushers. Soros says China is a third of the U.S. economy; it cannot replace the American consumer as the motor of global economy. Growth will happen, but will be slower.
George Soros discusses his 2008 portfolio performance:
âAlthough I positioned myself reasonably well for what was coming last year, one thing I got wrong cost me dearly: there was no decoupling between markets of the developed and developing worlds. Indian and Chinese stocks were hit even harder than those in the US and Europe. Since we did not reduce our exposure, we lost more money in India than we had made the year before. Our Chinese manager did better by his stock selection; we were also helped by the appreciation of the RMB.
I had to push very hard in my macro-account to offset both these losses and those incurred by our external managers. This had its own drawback: I overtraded. The positions I took were too large for the increasingly volatile markets and, in order to manage my risk, I could not go against the market in a big way. I had to try to catch minor moves. That made it difficult to maintain short positions. Although I am an experienced short-seller, I got caught several times and largely missed the biggest down-draught, in October and November. On the long side, where I stuck to my guns, I lost an enormous amount of money. I was impressed by the potential in the new deep-water oilfield in Brazil and bought a large strategic position in Petrobras (PBR), only to see it decline by 75 per cent at one point in time. We also got caught in the developing petrochemical industry in the Gulf.
We did get out of our strategic long position in Vale (RIO), the Brazilian iron ore producer, in time for the end of the commodity bubble and shorted the other big iron ore groups. But we missed an opportunity in the commodities themselves â partly because I knew from experience how difficult it is to trade them.
I was also slow to recognise the reversal of fortune for the dollar and gave back a large portion of our profits. Under the direction of my new chief investment officer, we did make money in the UK, where we bet that short-term interest rates would decline and shorted sterling against the euro. We also made good money by going long on the credit markets after their collapse.
Eventually I understood that the strength of the dollar was due not to people choosing to hold dollars but to their inability to maintain or roll over their dollar obligations. In a very real sense the strength of the dollar, like the fever associated with sickness, was a measure of the disruption of the financial system. This insight helped me to anticipate the downturn of the dollar at the end of 2008. As a result, we ended the year almost meeting my target of 10 per cent minimum return, after spending most of the year in the red."
Soros Fund Management LLC holds positions in over 200 companies, with a total portfolio value of $2.61 billion. Nearly half the fund is invested in oil & gas (other weightings since June â09). Quoting Wall Street Journal, â[T]he firm's assets across all types of investments grew by 41% to $24 billion from July 2008 to July 2009, according to a survey by industry publication AR.â
These are the fastest growing Soros stocks: Petroleo Brasileiro S.A.Petrobras (PBR-A), Fomento Economico Mexicano S.A.B. de C.V (FMX, Financial), Stone Energy Corp. (SGY, Financial), Steel Dynamics Inc. (STLD, Financial), SK Telecom Co. Ltd. (SKM, Financial).
Petroleo Brasileiro S.A.Petrobras (PBR-A)
Petrolo Brasilerio is a state (Brazil) operated oil company founded in 1953. Petroleo Brasileiro S.A.petrobras has a market cap of $187.72 billion; its shares were traded at around $42.79 with and P/S ratio of 38.9. The dividend yield of Petroleo Brasileiro S.a.petrobras stocks is 0.83%. Petroleo Brasileiro S.a.petrobras had an annual average earning growth of 36.6% over the past 10 years.The South American oil giant sold $4 billion in bonds in a two part debt sale. The sale is the largest bond issued by a Brazilian company. Company officials announced that PBR will prioritize natural gas for their domestic markets ahead of exports.
George Soros bought 5,884,700 shares in the quarter that ended in June 2009, which is 7.53% of the $2.61 billion portfolio of Soros Fund Management LLC. Compared to 2008 portfolio weightings, Soros has reduced his position in PBR from 19.53% to 7.53%.
Fomento Economico Mexicano S.A.B. de C.V (FMX)
Latin American-based Fomento Eco-ADR is the largest bottler for The Coca-Cola Co. The company brews alcohol beverages (Dos Equis) and operates Oxxo convenient stores. Fomento Economico Mexicano S.a.b. De C.v has a market cap of $16.01 billion; its shares were traded at around $44.84 with and P/S ratio of 1.41. The dividend yield of Fomento Economico Mexicano S.a.b. De C.v stocks is 0.41%. Fomento Economico Mexicano S.a.b. De C.v had an annual average earning growth of 46.5% over the past 10 years.The beer beverage company announced that they are expected to post 29% increase in 3Q profits on soft drink sales and store expansions. The company earned $193 million between July and September. FMX plans to raise beer prices 11% to compensate tax increase.
George Soros bought 9,900 shares in the quarter that ended in June 2009, which is 0.01% of the $2.61 billion portfolio of Soros Fund Management LLC.
Stone Energy Corp. (SGY)
Stone Energy is independent oil and Gas Company headquartered in Lafayette Louisiana and is engaged in the acquisition exploitation and operation of oil and gas properties located in the Gulf Coast Basin. Stone Energy Corp. has a market cap of $879 million; its shares were traded at around $18.3 with a P/E ratio of 12.36 and P/S ratio of 1.1. Stone Energy Corp. had an annual average earning growth of 36% over the past 10 years.The oil and gas company expects higher third quarter production for the third quarter. The company also said its borrowing base will remain at $425 million. As of Sept. 30, Stone Energy had $250 million in borrowings outstanding on its credit facility and another $69 million in outstanding letters of credit. Its cash position was about $97 million.
George Soros bought 550,000 shares in the quarter that ended in June 2009, which is 0.16% of the $2.61 billion portfolio of Soros Fund Management LLC.
Steel Dynamics Inc. (STLD)
Steel Dynamics Inc. owns and operates a flat-rolled steel mini-mill. The company produces hot-rolled and cold-rolled steel coils used for oil and gas transmission pipe and mechanical and structural tubing. Steel Dynamics Inc. has a market cap of $3.23 billion; its shares were traded at around $15.03 with and P/S ratio of 0.4. The dividend yield of Steel Dynamics Inc. stocks is 2%. Steel Dynamics Inc. had an annual average earning growth of 31.9% over the past 10 years.The company says production will be lower for the fourth quarter as scrap metal prices decline and construction sector weaken. Steel Dynamics says 3Q income fell 64% to $69 million compared to $193 million 3Q of 2008. Revenue decline 54% to $1.17 billion from $2.56 billion during the prior yearâs 3Q. Mindful, pricing reached historical peaks in the 2008 third quarter.
George Soros bought 200,000 shares in the quarter that ended in June 2009, which is 0.11% of the $2.61 billion portfolio of Soros Fund Management LLC.
SK Telecom Co. Ltd. (SKM)
S. Korea-based SK Telecom Co. is the world's first commercial CDMA digital cellular service. Since 1997, the company has provided service for more than 4 million cellular customers. SK Telecom Co. Ltd. has a market cap of $11.39 billion; its shares were traded at around $17.48 with a P/E ratio of 1.82 and P/S ratio of 1.03. The dividend yield of SK Telecom Co. Ltd. stocks is 3.37%. SK Telecom Co. Ltd. had an annual average earning growth of 29.2% over the past 10 years.October, the telecom company sold its stake in China Unicom for $1.3 billion. In 2006, SK Telecom bought $1 billion worth of bonds in China Unicom in an effort to expand into the Chinese mobile market. Last year, SK Telecom also left the U.S. mobile business when it sold struggling Helio to Virgin Mobile.
George Soros bought 12,200 shares in the quarter that ended in June 2009, which is 0.01% of the $2.61 billion portfolio of Soros Fund Management LLC.
Sources:
George Soros Interview (Oct 2009)
The New Paradigm for Financial Markets: The Credit Crisis of 2008 And What It Means
http://www.georgesoros.com/interviews
| Rank | Top 20 Holdings (% of portfolio) | Position in December 2008 |
|---|---|---|
| 1 | Petroleo Brasileiro (PBR): | 19.53% |
| 2 | Potash (POT): | 9.40% |
| 3 | Merrill Lynch (MER): | 5.84% |
| 4 | Best Buy (BBY): | 5.79% |
| 5 | Hess (HES): | 4.74% |
| 6 | Conoco Phillips (COP): | 3.84% |
| 7 | Union Pacific (UNP): | 1.77% |
| 8 | Arch Coal (ACI): | 1.70% |
| 9 | Schlumberger (SLB): | 1.56% |
| 10 | RR Donnelly (RRD): | 1.48% |
| 11 | Homex (HXM): | 1.37% |
| 12 | Consol Energy (CNX): | 0.75% |
| 13 | Map Pharmaceuticals (MAPP): | 0.62% |
| 14 | Walmart (WMT): | 0.57% |
| 15 | Hologic (HOLX): | 0.57% |
| 16 | Heinz (HNZ): | 0.52% |
| 17 | JetBlue Airways (JBLU): | 0.52% |
| 18 | Home Depot (HD): | 0.52% |
| 19 | Lowes (LOW): | 0.51% |
| 20 | Citi Trends (CTRN): | 0.29% |
