Dissecting George Soros' Recent Moves, Part 2: Smaller Equity Additions

by: Zvi Bar

This is part two of a series on the investment changes made by George Soros' Soros Fund Management during the third quarter of 2012. In part 1, I studied the new additions to Soros Fund that were valued at over $100 million. This part examines the smaller additions made by George Soros' hedge fund. Do keep in mind that small is a relative term, with these positions having values between about $40 million and $100 million. Nonetheless, each of the below-mentioned companies represents less than one percent of Soros Fund Management's total holdings. Where the larger investments in part 1 were listed by position size, these smaller investments are listed alphabetically.

Soros Fund Management added 260,000 shares of Amazon.com (NASDAQ:AMZN), valued at about $66 million at the end of the third quarter. Soros has taken positions in AMZN in the past, indicating that this more recent allocation may be short term. Amazon often does well in the fourth quarter due to the continued transition from traditional retailers to Internet options, among which AMZN is a behemoth. Like many U.S. equities, AMZN appreciated during the third quarter and declined during the first half of the fourth. After hitting its 200-day moving average in mid-November, AMZN shares started to appreciate going into the holiday season. See a recent performance chart for AMZN:

Soros' fund also took a position in Cheniere Energy (NYSEMKT:LNG). Soros acquired 4,590,272 shares of LNG during Q3, valued at about $71 million at the end of the quarter. Cheniere was initially an oil and gas exploration company, but it now concentrates on the development of liquefied natural gas regasification terminals. Cheniere can be seen as a way to invest in the international adoption of natural gas as an energy source, and particularly as a way to play the significant geographic price disparity that exists for natural gas. See a recent performance chart for LNG:

Additionally, Soros acquired about $50 million in Citigroup (NYSE:C) shares. Like many of Soros Fund Management's other investments in Q3, the hedge fund has traded Citigroup a few times since the sub-prime crisis rocked the markets, and particularly financials. It is entirely possible that the fund has already exited this position, given its substantial positive performance over the last several months. Citigroup shares appreciated approximately 50% during Q3 after bottoming to start the summer. Since the start of Q4, Citigroup shares have declined slightly, but showed resistance once shares breached their 50-day moving average. See a recent performance chart of C:

Soros Fund acquired 6,200,000 shares of Delta Air Lines (NYSE:DAL), valued at about $77 million at the end of the third quarter. Delta has been range-bound for years, bouncing between about $6 and $13 per share since 2009. Shares are now in the middle of that range. Airlines would stand to benefit from declining energy prices, as it would reduce their fuel costs, but any setback in the global economy could easily lessen demand for air travel due to reduced business and tourism. Shares of DAL appear to have bottomed out in September, and this too may have been an opportunistic short-term trade for Soros's fund rather than a longer-term investment. See a recent performance chart for DAL:

Soros Fund Management acquired 4,261,253 shares of Denbury Resources (NYSE:DNR) during the third quarter, worth about $69 million at the end of Q3. Denbury acquires mature oil fields and uses more recent technology, such as injecting carbon dioxide into the reservoir, to substantially grow what was previously declining production. Shares of DNR declined during the second quarter of 2012, following energy commodity prices down the charts, but have since stabilized. See a recent performance chart for DNR:

Soros' hedge fund acquired 1,295,558 shares of Freeport-McMoRan Copper (NYSE:FCX) during the third quarter, valued at about $51 million at the end of Q3. Freeport is the world's largest publicly traded copper miner, and is also a sizable miner of gold, molybdenum, cobalt hydroxide, silver, and other metals. Shares of FCX bottomed out over the summer, but began to again appreciate in August after shares made a multiple bottom. Freeport shares have declined so far in the fourth quarter, but have recently rebounded slightly along with the broader market. See a recent performance chart for FCX:

Soros Fund Management added 4,112,300 shares of General Motors (NYSE:GM) to its portfolio during Q3, valued at about $93 million at the end of Q3. Shares of the large U.S. automaker bottomed out in July, and have appreciated by about 25% since then. Though shares have had some weakness so far in Q4, they have fared better than the broader market. Nonetheless, they remain range bound. See a recent performance chart for GM:

Soros also acquired 950,000 shares of Home Depot (NYSE:HD) during Q3, valued at about $57 million at the end of the quarter. Home Depot has been a strong performer all year long, largely due to improving homebuilding statistics. Shares have also fared well in the fourth quarter in the wake of Hurricane Sandy's devastation and the corresponding need for homebuilding components and generators. Since the start of 2012, shares of HD are up about 52 percent. See a recent performance chart for HD:

Soros Fund Management also made a bet on Manchester United (NYSE:MANU), acquiring 3,542,995 shares of the team during the third quarter, valued at about $45 million at the end of the quarter. Manchester United is one of the most valuable sporting brands in the world. The team just went public during Q3, and Soros disclosed his position in MANU in mid-August.

Soros's hedge fund disclosed acquiring 4,400,000 shares of Peabody Energy (BTU) during the third quarter, valued at about $98 million at the end of the quarter. Peabody is one of the largest and best-known coal producers in the world, operating in the United States and Australia. Like most coal miners, BTU has been in a state of decline for several years, as natural gas has become more competitive and concerns over the environmental consequences of coal use have mounted. Peabody shares bottomed out this summer, remained range-bound throughout Q3, and then appreciated in the first half of Q4 as investors speculated that coal had reached a long-term bottom and/or that Mitt Romney may win the presidency. Since President Obama was re-elected, BTU shares have declined by about 20 percent, but are still at the high end of their Q3 trading range. See a recent performance chart of BTU:

Soros Fund Management acquired 1,140,488 shares of Target Corporation (NYSE:TGT) during the third quarter, valued at about $72 million at the end of the quarter. The well-known retailer performed well during Q3, but began to decline to start off the fourth quarter. After remaining range-bound for the last two months, shares appear poised to perform so long as this holiday season is a strong one, but ready to decline if the numbers disappoint. See a recent performance chart of TGT:

Soros Fund Management acquired 932,800 shares of Tyco International (NYSE:TYC) during Q3, valued at about $52 million at the end of the quarter. Tyco was once a major conglomerate, but has gone through a series of splits, with the most recent one occurring this past September. Tyco is now solely a fire and security firm. Soros Fund Management may have invested in TYC as a play on a housing turnaround in the United States and potentially improving economic conditions in emerging markets. Alternatively, it could be that the hedge fund believes that the broader market will overlook this portion of the former Tyco conglomerate. See a recent performance chart for TYC:

In part 3 of this series, I will examine Soros Fund Management's stake increases during the third quarter.

Disclosure: I am long C. I wrote this article myself, and it expresses my own opinions. I am not receiving compensation for it (other than from Seeking Alpha). I have no business relationship with any company whose stock is mentioned in this article.

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