A Review Of George Soros' Newest U.S. Equity Positions

Includes: APC, COF, CTXS, JPM, MS, PXP
by: Zvi Bar

Soros Fund Management LLC is one of the most successful and high-profile hedge funds. George Soros, the fund's well-known and politically influential founder, is considered one of the best living investors in both equities and currencies, with a net worth estimated at $20 billion.

Funds like Soros Fund Management are required to provide quarterly filings that state what U.S. traded equity positions the fund was holding at the end of the prior quarter, and last week the hedge fund filed its 13F-HR. By looking at these filings, we can ascertain what investments, if any, acclaimed investors like Soros may have initiated in the recent past, as well as what investments they might have dropped. This filing does not include all investments made by the fund, as the 13F filing only includes positions in U.S. equities.

This is a review of the new positions taken by Soros Fund Management during the fourth quarter of 2012. I have only included positions that had values of greater than $40 million, but the fund held about $4.5 billion worth of positions on its 13F-HR that were each individually below $40 million. The total value of positions listed on the filing, as of the end of 2012, was approximately $8.36 billion.

Soros initiated several new, reasonably small positions in financial equities last quarter, including Capital One Financial (NYSE:COF). The fund acquired 1,260,500 shares of COF, worth about $73 million at the end of 2012. Last quarter, the company, which is primarily known for its credit cards, completed its acquisition of ING's online banking unit, ING Direct, and COF shares appreciated significantly through the end of December, 2012, and into January of this year, but have declined by about 15 percent over the last five weeks. This recent decline has pushed COF shares below their Q4 2012 low, indicating a current buyer can allocate into COF at a better price than Soros Fund did. Below is a recent performance chart for COF:
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Soros Fund also added shares of JPMorgan Chase (NYSE:JPM) last quarter. The fund added 2,569,000 shares of the large bank, worth about $113 million at the end of 2012. Shares of JPMorgan declined considerably in the second quarter of 2012 and then spent the next two quarters regaining those losses. The bank's upward trend has continued into 2013, taking JPM shares up over 12 percent so far this year and over 33 percent in the last six months. Below is a recent performance chart for JPM:
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The hedge fund also added 4,144,200 shares of Morgan Stanley (NYSE:MS) last quarter, worth about $79 million at the end of the 2012. Morgan Stanley also declined in the second quarter of 2012, but much of that pain was apparently caused by fallout associated with the public offering of Facebook (NASDAQ:FB), which the market deemed a botched event. Nonetheless, shares have performed exceedingly well since bottoming out last year, and have appreciated by about 66 percent over the last six months. Moreover, MS shares have gained a whopping 27 percent since the start of 2013. This strength indicates that a short-term pullback may be due. Below is a recent performance chart for MS:
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Other than financials, Soros fund initiated three other positions last quarter. The largest of these three was in Anadarko Petroleum (NYSE:APC), where the fund acquired 755,655 shares of the large cap oil & gas company, worth about $56 million at the end of 2012. Shares of APC are up about 20 percent over the last six months and over 13 percent since the start of 2013. Anadarko declined in the first half of 2012 along with the underlying energy commodities, but the company has rebounded rather nicely and is now approaching its year ago valuation. Below is a recent performance chart for APC:
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Soros Fund Management acquired 950,000 shares of Citrix Systems (NASDAQ:CTXS) in the fourth quarter of 2012, worth about $62.5 million. Citrix is a provider of online business services, and may be best known for its GoToMeeting and GoToMyPC services. Citrix declined considerably at the start of the fourth quarter of 2012. Shares lost about one-third of their value between the middle of September and the middle of November, but has since steadily climbed. Shares are up over 20 percent over the last three months and about 12 percent since the start of 2013. The company reported better than expected profit to start off February and it appears that its upward trend may continue in the near term. Below is a recent performance chart for CTXS:
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The hedge fund also initiated a position in Plains Exploration & Production Company (NYSE:PXP). Soros acquired 953,000 shares of PXP last quarter, worth about $45 million at the end of 2012. Plains Exploration is a domestic oil and gas exploration & production company with focus on both mature properties with long-lived reserves and newer properties with development potential.

Plains Exploration had a difficult 2012, much like most other companies with natural gas exposure, but it spiked up at the start of December when it was announced that Freeport-McMoRan (NYSE:FCX) would acquire the company. Soros Fund may have been interested in PXP as an energy play, as it holds many companies with energy exposure, but it appears equally likely that the fund allocated into the company as a merger arbitrage play. Below is a recent performance chart for PXP:
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All of these new positions are reasonably small within Soros Fund Management's greater portfolio. The hedge fund's U.S. equity holdings represent about one-quarter of the fund's total holdings and each of these new positions represents between about one-half of one percent and 1.4 percent of the equity holdings.

In total, these six new positions represent about five percent of the hedge fund's domestic equities, or less than two percent of its total holdings. If there is a clearest bullish predisposition to be recognized from these new positions, it would appear to be an expectation by the fund that financials should outperform, as half of these new stakes are within members of the financial sector.

Disclosure: I have no positions in any stocks mentioned, and no plans to initiate any positions within the next 72 hours. 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.