This is part three 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. Part 2 examined the smaller additions made by George Soros' hedge fund. Part 3 is a review of the positions that the hedge fund increased during the third quarter.
Listed below are the holdings in which Soros Fund Management increased its position size during the third quarter. The fund already held at least some of these equities going into Q3, with several of the positions existing for years. Some are traded on a regular basis, and about half of the positions were reduced during Q2, only to be increased during Q3 of 2012. These positions are listed in alphabetical order, and I have only included positions valued at over $15 million.
Soros Fund Management increased its number of shares in Acacia Research Corporation (NASDAQ:ACTG) by about 20 percent during the third quarter, from 3,329,179 to 3,913,037. Despite this increase, the total holding actually decreased in value during the quarter from about $120 million to about $107 million. Acacia acquires licenses for patented technologies used in media, information technology and medicine. Most of Soros' hedge fund's position in ACTG was acquired during the first quarter of 2012, and the fund added shares in each of the first three quarters of 2012. The company declined considerably in July, and is still down about 40 percent since the start of the year. Acacia currently trades well below whatever price Soros Fund Management acquired its shares, indicating that if the fund's premise in investing in ACTG is valid, it is currently a good value. See a recent performance chart for ACTG:
Soros Fund Management also increased its stake in Adecoagro (NYSE:AGRO) from 25,385,678 to 25,911,633 shares, with a value of about $260 million at the end of Q3. Adecoagro is a South American agricultural company. Soros has been involved in AGRO since before it went public. Though the hedge fund did sell some of its shares in AGRO shortly after the IPO, the fund has acquired more shares over he past two quarters. The fact that Soros' hedge fund is not continuing to divest itself of shares in AGRO indicates the fund is intending on holding onto its position for awhile, which is a good thing for other AGRO shareholders. Soros Fund Management's 21.5% stake in AGRO makes it the company's largest shareholder. See a recent performance chart for AGRO:
Soros' hedge fund added to its position in Apple Inc. (NASDAQ:AAPL), though the position is still small at about $56 million at the end of the quarter. The fund actually decreased its holding in Apple in the second quarter. Despite the position's reasonably small size, the 142 percent increase from 35,000 to 84,858 shares is substantial. Shares of AAPL declined during the second quarter and appreciated in the second half of the third quarter, but have given back most of those gains since the start of the fourth quarter. See a recent performance chart of AAPL:
Soros' hedge fund increased its stake in Charter Communications (NASDAQ:CHTR) by about five percent during Q3 to 2,011,297 shares, valued at about $151 million at the end of the quarter. The hedge fund also acquired a substantial amount of shares in the cable operator during each of the first two quarters of 2012. After performing relatively well through the first three quarters of 2012, Charter has been in a downtrend since peaking in September. If the hedge fund was just riding a trend in CHTR, it may end up reporting it sold much or all of its position in the fourth quarter. See a recent performance chart for CHTR:
Soros also increased its stake in DaVita Inc. (NYSE:DVA) during the third quarter, from 123,000 to 160,000, valued at about $16 million at the end of the quarter. Soros had reduced his position in the healthcare provider during the second quarter. This is a minor position in the hedge fund's portfolio, so it is difficult to tell whether this is a trade or a longer-term accumulation still in its infancy. Shares of DVA have been strong performers since the start of June, when they bottomed out, and are up about 37 percent since then. See a recent performance chart for DVA:
The hedge fund also increased its position in Express Scripts (NASDAQ:ESRX), which grew from 1,339,000 to 2,168,000 shares during Q3, with a value of about $136 million at the end of the quarter. Soros has been accumulating ESRX for over a year. In addition to increasing its position in ESRX, the hedge fund also initiated a 3,630,300-share position in Walgreen Co. (WAG) during Q3. The two companies had been in a dispute, with WAG leaving ESRX's prescription benefit program, but reached a multi-year agreement in mid-July. Express Scripts had appreciated by over 15% during the third quarter, but gave back all of those gains and then some after providing a reduced 2013 outlook last month. See a recent performance chart for ESRX:
Soros Fund Management increased its stake in General Electric (NYSE:GE) by about 20% in the third quarter, from 8,577,00 shares to 10,447,890. The hedge fund's position in the conglomerate was worth about $237 million at the end of Q3. GE appreciated by about 25% during the third quarter of 2012, but declined by about 10% since the start of the fourth quarter. Once GE shares breached their 200-day moving average in mid-November, they showed some downside resistance and moved up to their 20-day moving average. See a recent performance chart for GE:
Soros Fund Management also increased its gold holdings, including gold miners, and did so through the Market Vectors Gold Miner ETF (NYSEARCA:GDX) and the SPDR Gold ETF (NYSEARCA:GLD), both of which I list alphabetically under G for gold. The hedge fund increased its stake in GDX during Q3 by about 130 percent, from one million shares to 2,325,000, valued at about $135 million at the end of the quarter. See a recent performance chart for GDX:
Soros' stake in GLD also increased from 884,400 shares to 1,32,400 shares, valued at about $227 million at the end of the quarter. See a recent performance chart for GLD:
Soros' total holdings in these two ETFs, as well as a smaller stake in an ETF of junior miners that did not change during Q3, totaled over $410 million at the end of the quarter, from about $230 million at the end of Q2. Soros' gold and gold miner ETF positions total about 5% of the fund's total holdings
Soros Fund Management also increased its stake in Macy's Inc. (NYSE:M) from 760,000 shares to 1.2 million, valued at about $45 million at the end of the fourth quarter. The hedge fund has bought and sold shares in Macy's in the past, including selling some shares during Q2 of 2012. This may be an example of good trading, or the fund may be accumulating positions in retailers in advance of the fourth quarter. Shares bottomed out in July, but quickly appreciated in mid-July and August, and have been range-bound since going into the holiday shopping season. See a recent performance chart for M:
The hedge fund increased its stake in Motorola Solutions Inc. (NYSE:MSI) by about 20% during the third quarter, from 2,403,161 shares to 2,854,961 shares, valued at about $144 million at the end of the quarter. The hedge fund actually cut its position in MSI during Q2. It had appeared as though Soros was beginning to unload its position, but last quarter's increase makes this less probable. Shares of MSI bottomed out in July, and have appreciated by about 20% since then, so theses changes, too, may merely be an example of good trading. See a recent performance chart for MSI:
The hedge fund increased its position in NetApp Inc. (NASDAQ:NTAP) by about 35% during the third quarter, from 4,476,033 shares to 6,025,033. The fund also added shares in Q2, and the position grew to total nearly $200 million at the end of Q3. Shares had declined during Q2, increased slightly during Q3 and have again taken a step downward during Q4. Nonetheless, shares recently began to appreciate again after the company reported better than expected quarterly results. If the fund's purchases were sensible these two quarters, then shares are still at or near the lowest price at which the hedge fund would have made those purchases. See a recent performance chart for NTAP:
Soros Fund Management increased its position in Shutterfly Inc. (NASDAQ:SFLY) during the third quarter as well. The hedge fund initiated a position in the personal publishing company in the first quarter of 2012, and also increased it in Q2. The company now owns 3,046,700 shares of SFLY, valued at about $95 million at the end of the third quarter. This is about an 8.4% position in the company, indicating a strong level of conviction in SFLY. Shares in the company appreciated during most of the third quarter, but spiked down to start off November and are now near the lower end of their 2012 trading range. See a recent performance chart for SFLY:
Soros also increased its position in SunTrust Banks (NYSE:STI) during the third quarter of 2012, after decreasing its stake during Q2. Soros initiated its stake in the bank during the first quarter. The increase during Q3 was substantial, from 2,365,000 shares to 4,041,000 shares, valued at about $114 million at the end of the quarter. The fund may be trading in the name rather than long-term investing. It would not be surprising to see that Soros sold some shares in the bank in Q4. Suntrust appreciated by about 40% during Q3, but have declined by about 10% so far in Q4. See a recent performance chart for STI:
Soros' hedge fund also increased its stake in US Airways Group Inc. (LCC). Like many other already existing positions that were increased during Q3, the hedge fund had decreased its position in LCC during Q2. The position was substantially increased this past quarter, from 1,288,000 to 6,270,009 shares, valued at about $66 million at the end of the quarter. In addition to this sizable position increase, Soros Fund Management also initiated a 6.2 million-share position in Delta Air Lines (NYSE:DAL) during Q3. Shares of US Airways declined by about 30% in July, but started to appreciate in August and are now 25% higher than their August bottom. It is unclear whether Soros acquired the nearly five million shares of LCC the fund bought in Q3 before or after that decline, but it is likely that the purchases were made at prices below LCC'c current price. It would not be surprising to learn that the fund sold some of those shares during Q4, especially if they continue to appreciate. See a recent performance chart for LCC:
In the next part to this series, I will review the stake decreases and total stake sell-outs made by Soros Fund Management.
Disclosure: I am long GE. 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.