It’s just as well that George Soros has a philosophy (as the Wall Street Journal reminds us) of spotting a bubble and buying it, as he puts it.
When it comes to gold, which he famously described at the recent World Economic Forum in Davos as “the ultimate asset bubble”, he has indeed put his money where his yellow metal is.
As the Daily Telegraph reports on Thursday, regulatory filings show that Soros’s $8.8bn investment vehicle, Soros Fund Management, raised its stake in exchange-traded fund SPDR by 3.7m shares to 6.2m shares in the three months ending December 31, 2009. The report continues:
The new shares were bought at a price of $421m, taking his total holding in the fund to $663m at the end of December. In addition, Mr Soros’s investment vehicle owns 11,000 call options that will permit it to buy an extra 1.1m shares should gold prices move higher.
Soros Fund Management also increased its stake in Canadian-based gold producer Yamana Gold, buying 60,880 shares to take its total position to 85,880 shares, worth $973,314 at the end of December.
To MarketBeat, however, the “juxtaposition of these two facts” (Soros’s “ultimate asset bubble” warning and his fund’s big increase in purchases) is “somewhat jarring”. The blog continues:
It would seem odd that Mr Soros would jawbone down gold holdings that he already owned. (Unless of course, he wanted to scoop up some more at reduced prices.) Or perhaps, Mr Soros had already sold out of his position by the time he made the comments in late January. As with the statistics on the back of baseball cards, the data we get from SEC filings is always stale. And the latest only go through Dec 31.
Or of course, it adds, it “could be the fact that Mr Soros is just saying what he thinks”; MarketBeat concludes:
There’s a bubble out there. And while they tend to be rather messy when they pop, people — including himself — can make a lot of cash riding them as they inflate.
Indeed, aside from gold, Soros’s hedge fund has taken some other interesting investment decisions lately, having vastly increased its holdings mainly in financial and telecoms companies, dropped some key tech stocks and overhauled its positions in retailers in the fourth quarter of 2009.
As the Wall Street Journal reports:
Soros Fund Management reported holdings of $8.8 billion as of the end of the year, up from $6.2 billion as of Sept. 30, according to a filing late Tuesday with the U.S. Securities and Exchange Commission.
The fourth quarter represented a large amount of turnover for the holdings in Soros’ fund. Notably, Soros added 94.7 million shares in Citigroup Inc., worth $313.4 million at the time. The fund also added stakes in Fifth Third Bancorp and BB&T Corp., while slashing its stake in J.P. Morgan Chase & Co. to 4,500 shares from 73,700.
The fund also added to its position in the telecommunications sector. It doubled its stake in Leap Wireless International Inc., which is reportedly looking for an acquirer, as well as doubling its stake in Motorola Inc., which last week unveiled its plan to split into separate publicly traded companies. Soros Fund Management also added slightly to its position in AT&T Inc.
Meanwhile, gold has been on its own distinctive trajectory. While it remains the favoured safe-haven asset for various pundits — hitting a fresh high of just over $1,225 an ounce in December, having risen 40 per cent in the preceding 12 months – it was trading in New York at $1,115.55 an ounce on Wednesday, having hit a one-month high of $1,126.85 earlier in the day.
But since then, it has come off a bit, primarily because of the IMF’s announcement earlier this week that it would begin selling some of its reserves on the open market, raising concern that supply will increase.
As Bloomberg reports on Thursday:
The IMF, which set out in September to sell about 13 per cent of its gold reserves, said it will “shortly” expand sales to the open market after central banks bought 212 metric tons in private deals.
Gold for immediate delivery, which fell 1.1 per cent [on Wednesday] after the IMF’s announcement, dropped 0.4 percent to $1,102.85 an ounce at 1:57 p.m. in Singapore. Bullion for April delivery weakened 1.5 percent to $1,103.30 an ounce in New York.
“The IMF sale plan is weighing on the gold market as the supply increases when demand isn’t very robust,” said Park Hyun Sun, a trader with Eugene Investment & Futures Co. in Seoul. “Still, there won’t be any collapse in prices as the market has found some solid support near $1,070-$1,080.”
No collapse in prices? Well that’s alright then, by George….
Related links:
George Soros gets his way with the G20 – FTAlphaville
Soros shows how to make more money and look like a nice guy – FTAlphaville
Soros increased bet on gold last year – WSJ