Hedge Fund Portfolio Tracking: Soros Fund Management (George Soros), Q4 2008

This is the Fourth Quarter 2008 edition of our ongoing hedge fund portfolio tracking series. Before reading this update, make sure you check out the Hedge Fund 13F filings preface.

We've already covered:

• Paulson & Co. (John Paulson),
• Carl Icahn
• Warren Buffett
• Lone Pine Capital (Stephen Mandel)

Next up is Soros Fund Management run by George Soros. Soros is famous for his stellar returns with partner Jim Rogers when they ran their Quantum fund. Now, he has carried his investment style over to his own firm, Soros Fund Management. Whether it’s equities, bonds, currencies, debt, or commodities, Soros is more of a global macro player, seeking investments in whatever market they can gain an edge. So, keep in mind that these equity positions only represent a portion of the fund's overall holdings. It is not required to disclose holdings outside of equities, notes, and stock options. To say the least, 2008 was an interesting time to be investing. Soros recently detailed his thoughts about his portfolio from 2008 and it makes for a good read.

Soros is good to track because of his excellent macro sense and formidable track record as an investor. His thoughts on the current financial landscape are detailed in his latest book, The New Paradigm for Financial Markets: The Credit Crisis of 2008 and What It Means. Soros sees a vast consolidation in the hedge fund space in the near future, as we noted when we recently checked in on Quantum Fund ex-partners, Jim Rogers & George Soros. If you want to get a better sense as to how Soros formulates his investment theses, we highly recommend reading his first book, The Alchemy of Finance. This book is a staple in our recommended reading list and after you read it, you'll understand why.

The following were its long equity, note, and options holdings as of December 31, 2008 as filed with the SEC. We have not detailed the changes to every single position in this update, but we have covered all the major moves. All holdings are common stock unless otherwise denoted.

Some New Positions (Some of the brand new positions that it initiated in the last quarter):

• Merrill Lynch (MER)
• Mylan (MYL)
• Homex (HXM)
• R.R. Donnelly & Sons (RRD)
• Harmonic (HLIT)
• Kinross Gold (KGC)
• Streettracks Gold ETF (GLD)
• Genworth Financial (GNW)
• EMC (EMC)
• Solera (SLH)
• CBL & Associates (CBL)
• Discovery Communications (DISCK)
• Discovery Communications (DISCA)
• Yahoo (YHOO)
• Amdocs (DOX)
• Texas Instruments (TXN)
• JB Hunt (JBHT)
• Symantec (SYMC)
• Cirrus Logic (CRUS)
• Covidien (COV)

Some Increased Positions (A few positions it already owned but added shares to. major moves are listed):

• Petroleo Brasileiro (PBR)
• Potash (POT)
• Best Buy (BBY)
• Hess (HES)
• Conoco Philips (COP)
• Union Pacific (UNP)
• Arch Coal (ACI)
• Schlumberger (SLB)
• Lorillard (LO)
• Teradata (TDC)
• Google (GOOG)
• Consol Energy (CNX)
• Lattice Semiconductor (LSCC)

Some Reduced Positions (Some positions it sold some shares of - note not all sales listed, just the major moves):

• Wal-Mart (WMT)
• Wind River (WIND)
• JetBlue (JBLU)

Removed Positions (Positions it sold out of completely):

• Research in Motion (RIMM)
• ishares Dow Real Estate (IYR)
• Powershares QQQ (QQQQ)
• Auxilium Pharmaceuticals (AUXL),
• Whiting Petroleum (WLL)
• Suncor (SU)
• Chesapeake Energy (CHK)
• International Rectifier (IRF)
• Buffalo Wild Wings (BWLD)
• Anheuser Busch (BUD)
• Frontline (FRO)
• Bank of America (BAC)
• Collective Brands (PSS)
• Companhia Siderugica (SID)
• Centennial Communications (CYCL)
• Entergy (ETR)
• Suntrust Banks (STI)
• Nasdaq (NDAQ)
• General Growth Properties (GGP)
• Kimco Realty (KIM)
• Bank of New York Mellon (BK)
• CSG Systems (CSGS)
• Tekelec (TKLC)
• GATX (GMT)
• Carmax (KMX)
• Echostar (SATS)
• Extreme Networks (EXTR)
• Amazon (AMZN)
• Radisys (RSYS)
• Medivation (MDVN)
• ITT Corporation (ITT)
• Micron Technology (MU)
• Alcatel (ALU)

Top 20 Holdings (by % of portfolio)

1. Petroleo Brasileiro (PBR): 19.53% of portfolio
2. Potash (POT): 9.4% of portfolio
3. Merrill Lynch (MER): 5.84% of portfolio
4. Best Buy (BBY): 5.79% of portfolio
5. Hess (HES): 4.74% of portfolio
6. Conoco Phillips (COP): 3.84% of portfolio
7. Union Pacific (UNP): 1.77% of portfolio
8. Arch Coal (ACI): 1.7% of portfolio
9. Schlumberger (SLB): 1.56% of portfolio
10. RR Donnelly (RRD): 1.48% of portfolio
11. Homex (HXM): 1.37% of portfolio
12. Consol Energy (CNX): 0.75% of portfolio
13. Map Pharmaceuticals (MAPP): 0.62% of portfolio
14. Wal-Mart (WMT): 0.57% of portfolio
15. Hologic (HOLX): 0.57% of portfolio
16. Heinz (HNZ): 0.53% of portfolio
17. JetBlue Airways (JBLU): 0.52% of portfolio
18. Home Depot (HD): 0.52% of portfolio
19. Lowes (LOW): 0.51% of portfolio
20. Citi Trends (CTRN): 0.29% of portfolio

The major moves in Soros' portfolio come from energy and agriculture. PBR and POT were among many other global growth type names to which he added large positions. He definitely seems to think all these energy related names are attractive. He sold out of a lot of his Wal-Mart positions and out of all of his Research in Motion. He also added heavily to his position in Best Buy and started a new, large position in Merrill Lynch.

Assets from the collective long U.S. equity, options, and note holdings listed above were $4.6 billion. If you want to hear some more insightful thoughts from George Soros himself, head over to our post on Hedge Fund manager interviews, or check out his recent interview with Fareed Zakaria discussing the current crisis.

Comments

[Mad Hedge F...:]

Legendary investor George Soros has substantially increased his investment in Potash (POT) and Petrobras (PBR), two stocks I love. Potash is the Saskatchewan based world’s largest miner of potassium carbonate, which is in heavy demand for fertilizer from China. The stock is only just recovering from a melt down from $240 to $50. Petrobras is Brazil’s oil major, which has made a sting of offshore oil discoveries. PBR gives you a triple play on the recovery of crude prices, a long in the Brazilian currency, the Real, and the high growth rate of this emerging economy. All three offer great entry points right now. A classic “George” play.

Feb 23 11:05 AM

[pooramerican:]

I bet you he gets a nice bath on BBY , MER and GenWorth Financial.
the other picks probably make up for the loss though. but he has a big tech holdings which I am not sure is going to perform that good this year

Feb 23 09:33 PM

[ROLEXDAYTONA:]

For a very long time I suspect Soros for running Madoff/Stanford fund, his returns are always in low percentage but how can you trust it, nobody knows it.
I maybe wrong but from all hedge funds, Soros I trust the least.
All this returns in general, nobody knows the exact number, hedge funds are not regulated and trade in OTC, how come Soros made 8% in 2008 when he was invested too heavily in commodities...all I can say, it stinks very much.

Feb 24 11:17 AM

[naidle:]

Yes but if he sold many of his holdings at a peak (or at least back in late September) like he did Vale then that would offset much of the losses you see there.

If he held all funds for 1 year he'd be hurting badly but I suspect over the past 12 months he's become much more of a day trader than he'd like to be.


On Feb 24 11:17 AM ROLEXDAYTONA wrote:

> For a very long time I suspect Soros for running Madoff/Stanford
> fund, his returns are always in low percentage but how can you trust
> it, nobody knows it.
> I maybe wrong but from all hedge funds, Soros I trust the least.
>
> All this returns in general, nobody knows the exact number, hedge
> funds are not regulated and trade in OTC, how come Soros made 8%
> in 2008 when he was invested too heavily in commodities...all I can
> say, it stinks very much.

Feb 24 05:41 PM