John Paulson Piles into Gold; George Soros Sells Petrobras and Potash

Now that SEC filings for 1st quarter 2009 have come in, the following is a very quick look at some moves from the hottest hedge fund managers over the past 3 years, John Paulson and venerable George Soros.

Paulson continues to grow his gold stash as he views inflation rather than deflation the coming scourge. [Mar 17, 2009: John Paulson Joins David Einhorn as Gold Bug with Stake in AngloGold Ashanti (AU)]. Amazingly his fund now owns 8.7% of the entire SPDR Gold Trust (GLD) - wow. And if I read this correct a 15% stake in the Gold Miners ETF (GDX).

Via Bloomberg

• Paulson & Co., the hedge-fund firm run by billionaire John Paulson, increased its investment in gold and gold-mining shares in the first quarter, according to a regulatory filing. As of the end of the first quarter, Paulson was the largest holder of SPDR Gold Trust, an investment fund that buys gold bullion. The New York-based firm owned 8.7 percent of the fund, valued at $2.8 billion as of March 31, according to a filing with the U.S. Securities and Exchange Commission.
• That position was established as a hedge, the company said in a statement, because its funds have a share class that is denominated in gold rather than in dollars or euros.
• Paulson bought or added to several gold companies in the quarter as well. He purchased a 15 percent stake in Market Vectors Gold Miners ETF, a fund that mirrors the move in the Amex Gold Miners Index. That stake was worth $638 million at the end of the quarter.
• Paulson also bought a 2.6 percent of Gold Fields Ltd., becoming the fourth-largest holder of the Johannesburg-based gold miner. The investment firm, which manages $26 billion, also bought an additional 2.4 million shares of Kinross Gold Corp. Paulson owned 4.4 percent of the Toronto-based gold producer and was its third-largest holder at the end of the quarter.
• Paulson reported owning an 11.3 percent stake in AngloGold Ashanti Ltd., also based in Johannesburg, in March.
• Paulson’s largest fund, the Advantage Plus Fund Ltd. returned 4.8 percent through April.

[Nov 18, 2008: Paulson Buying Mortgage Backed Securities]

[Jan 31, 2009: Dealbook - John Paulson's Year End Review]

Meanwhile George Soros cut back some of his holdings in Petrobras (PBR) and Potash (POT) - although not too much in the latter after making huge pushes into both a quarter previous. [Feb 18, 2009: George Soros Increases Stakes in Potash & Petrobas]

Via Bloomberg

• Soros Fund Management LLC, billionaire investor George Soros’s hedge-fund company, cut stakes in Petroleo Brasileiro SA and Potash Corp. of Saskatchewan, its biggest holdings in the first quarter, according to a filing.
• The New York-based fund sold 5 million U.S. shares of Petrobras, (PBR) as the company is known, during the quarter, according to a filing today with the U.S. Securities and Exchange Commission. Soros’s remaining 32 million shares of the Brazilian state-controlled oil company were valued at $963 million at the end of the quarter.
• The fund also held 5.6 million shares of Saskatoon, Saskatchewan-based Potash (POT) at the end of the first quarter, compared with 5.9 million shares as of Dec. 31.

Other moves

• Soros bought 968,000 shares of Entergy Corp (ETR)., the second- largest U.S. operator of nuclear power plants, and 3.59 million shares of Houston-based Plains Exploration & Production Co.(PXP) in the first quarter. Soros sold off its stake in Schlumberger Ltd.,(SLB) the world’s largest oilfield-services provider, and U.S. coal producer Consol Energy Inc.

• Soros’s company oversees about $21 billion. Its Quantum Endowment Fund returned 7.2 percent in the first quarter.

Just a quick look, I'll be peeking at SEC filings to get further insights.

Disclosure: Long Potash in fund, no personal position

Comments

[manya05:]

Listening to Warren Buffett lately it has become apparent how out of touch he has become...I think Soros just got on the same bus with him. But what do I know.

May 18 09:05 AM

[Hot Richard:]

Big fan of Paulson. And, I love Buffett but think speculators like Soros will do better in this gambling, corrupt, government-expanding, manipulated global market we have right now.

I'd rather live in a buy-and-hold world, but I don't (except for gold).

May 18 09:13 AM

[MarkitWacha:]

I'm convinced that Jim Rogers was the real brains behind Soros' wealth. I do agree with selling Petrobras, however. The risks to oil profits after 2013 are considerable. See generalfusion.com. Natural gas will remain cheap long enough to eat away oil profits, too.

May 18 09:39 AM

[GMiki1:]

Soros is right in re nuclear--but it's a long-term bet. I agree with selling Petrobras because the offshore oil is going to take going to hell to get, it's that far down, and the costs (and setbacks) will be enormous. Paulson is just plain smart, although the miners are better long term than GLD, but GLD is "a trading vehicle."

May 18 10:37 AM

[joes:]

Soros is making a smart move on the nuclear investment, he is still sitting on a billion with Petrobras and the potash move looks to be more of a rebalancing.

As for the comment that Rodgers was the brains, that is pure western bias, Soros was up last year, this year and will be up next year.

Paulson's investment in gold is simply his knowledge of the market, as useless as gold is, it still captivates the most superstitious of investors. Therefore it defies any logic since there is no supply/demand relationship, only the irrational herd.

May 18 12:40 PM

[Jason Hamlin:]

I'll take that "useless and superstitious" investment that has returned on average 30% per year over the past decade (and much more for mining stocks). I guess I will defy logic and remain irrational all the way to the bank.

It is hilarious when gold bashers still have the nerve to talk bad about the metal despite it being the best investment class over the past 8 years. Brilliant maestro!

May 18 02:04 PM

[Jason Hamlin:]

Oh and you should mention how gold doesn't pay interest or dividends either. I love that logic. Woe is me, with my 30% gain and no dividends, while you get a few percentage points and dividends.

May 18 02:07 PM

[Maxe Paul:]

I would bet that Paulsons position in gold is more a hedge against the US $ than a bet it (GOLD) is going to rise.

Or to put it simply, he is betting on a fall in the US $.

May 19 08:14 AM

[user41653:]

Only Thing I want to Know is Why GS is not required to Pay back the $180 Billion they got through the "Back Door" from AIG got when they got that bailout. GS Got $180 Billion FREE US Taxpayer Dollars , Dilan Radigan was about to investigate this , when he was suddenly fired from CNBC . In early Apr , write Your Senator or Congress man and ask him where that $180 BILLION went ??? May 19 11:59 AM |Report abuse| Link | Reply 00

May 19 12:09 PM

[Henrique Si...:]

Good article.

Doug Casey is also very bullish on gold stocks.

I think the way to go is to short Oil and S&P Futures as I have been doing. By the way, I am doing an experiment and posting my real time trading decisions on my website.

Regards

May 19 01:06 PM

[Jasper M:]

While I have something of a love-hate relationship with Mr. Soros, this time, I cannot fault him. At worst, he is a little early. Oil is clearly toppy, and the Brazilian stocks tend to trade as more volatile proxies of developed-nation industry leaders. With positions of his size, better to be out sooner than caught in later.

May 19 01:08 PM

[Henrique Si...:]

I have been more bullish in Silver then Gold.

I think a long SLV / short GLD position would be a very good one. I am going to write a piece about that in the Oil Trader`s Blog.

The historical ratio between Gold and Silver is near an all time high.

May 19 01:19 PM

[johnbee:]

Gold reflects the $ price. If gold goes up it makes the $ look cheap so its controlled by powerful forces to suit. Maybe Paulson knows the controls will come off soon now the stock market market has been manipulated upwards so as to devalue the $ sufficiently to push up housing prices and repay $ Treasury debts at lower value.

May 19 02:33 PM

[auto44:]

duh!
Isin't that the point?

On May 19 08:14 AM maxe wrote:

> I would bet that Paulsons position in gold is more a hedge against
> the US $ than a bet it (seekingalpha.com/symbo...) is going
> to rise.
>
> Or to put it simply, he is betting on a fall in the US $.

May 19 06:30 PM

[onebir:]

"That position was established as a hedge, the company said in a statement, because its funds have a share class that is denominated in gold rather than in dollars or euros."

Perhaps this would be a more accurate headline: "Paulson & Co clients switched into gold denominated holdings, fund buys gold stocks in Q1".

Does the increasing preference of Paulson & Co clients of gold vs currency denominated assets have any significance? Not sure. If they were 'smart money', how much need would they have for a hedge fund to make investment decisions for them?

May 19 06:57 PM

[doubleguns:]

Are you nuts!!!!! If silver goes up gold will too. Yes silver might go up faster and bring the GSR a lot closer to 50 or for that matter 40. But if you think silver is going to go up and gold down in any significant amount......Your Nuts.


On May 19 01:19 PM Henrique Simoes wrote:

> I have been more bullish in Silver then Gold.
>
> I think a long SLV / short GLD position would be a very good one.
> I am going to write a piece about that in the Oil Trader`s Blog.
>
>
> The historical ratio between Gold and Silver is near an all time
> high.

May 19 09:22 PM

[Peter Cooper:]

Dubai investors have also been stocking up on gold, and those Saudis who bought $3.5bn worth last autumn could also have been buying futures on the local commodity exchange which is now doing very well indeed. Dubai handles 20% of the world's gold trade, see:
arabianmoney.net/2009/.../

May 20 12:05 AM

[ElSid:]

Love the irony, that Hamlin, the gold website guy, debunks the "herd" post by saying that gold is up over the past 8 years. How come his "archives" only go back to 2006? Right. Herd. And it's a total non-starter as far as an argument, an nearly proof off the Joes contention.

No doubt one would feel a little sensitive - analyzing precious metals charts is pretty much the ultimate in superstitious nonsense.

Oh, and love the internet implication that you've been invested in gold since the bottom. That's another "How come the archives only go back to 2006?"

May 20 02:34 AM

[waitaminit:]

Too bad we can't get a report like this for recent transactions. Why is the Soros Goldman Sacs sale going unreported in the news?

May 20 09:18 AM

[Mr. Ed, Jr.:]

Sells Petrobras ? Soros sold 5 million of his 37 million shares. How does that get a headline of "George Soros sells Petrobras " ? The stock has had a significant runup since he bought it, and it is reasonable that he take some profits.

With a headline like that, I expect to see "Film at 11" after it.

May 20 01:47 PM

[TraderMark:]

I don't write headlines, Seeking Alpha does ;)

Blog title of piece was:
John Paulson Continues to Pile Into Gold (GLD); George Soros Sells Some Petrobras (PBR) and Potash (POT)


On May 20 01:47 PM Mr. Ed, Jr. wrote:

> Sells Petrobras ? Soros sold 5 million of his 37 million shares.
> How does that get a headline of "George Soros sells Petrobras " ?
> The stock has had a significant runup since he bought it, and it
> is reasonable that he take some profits.
>
> With a headline like that, I expect to see "Film at 11" after it.
>
>
>
>
>

May 20 02:11 PM

[Mr. Ed, Jr.:]

And you write well-- I enjoy your columns. But the headline did get my attention, since I am in PBR because Soros is in it. If he bails, I bail. Thus, my concern when I saw the headline.


On May 20 02:11 PM TraderMark wrote:

> I don't write headlines, Seeking Alpha does ;)
>
> Blog title of piece was:
> John Paulson Continues to Pile Into Gold (seekingalpha.com/symbo...);
> George Soros Sells Some Petrobras (seekingalpha.com/symbo...)
> and Potash (seekingalpha.com/symbo...)

May 20 05:49 PM

[wheelbarrel...:]

Damn I didn't know Radigan got fired - go figure


On May 19 12:09 PM user41653 wrote:

> Only Thing I want to Know is Why GS is not required to Pay back the
> $180 Billion they got through the "Back Door" from AIG got when they
> got that bailout. GS Got $180 Billion FREE US Taxpayer Dollars ,
> Dilan Radigan was about to investigate this , when he was suddenly
> fired from CNBC . In early Apr , write Your Senator or Congress man
> and ask him where that $180 BILLION went ??? May 19 11:59 AM |Report
> abuse| Link | Reply 00

May 20 10:16 PM

[wheelbarrel...:]

So does that mean gold hasn't been a better investment for the last 8 to 10 years? It isn't hard to see what spot gold prices were in 1999 so I guess I am missing the point.


On May 20 02:34 AM ElSid wrote:

> Love the irony, that Hamlin, the gold website guy, debunks the "herd"
> post by saying that gold is up over the past 8 years. How come his
> "archives" only go back to 2006? Right. Herd. And it's a total non-starter
> as far as an argument, an nearly proof off the Joes contention.<br/>
>
> No doubt one would feel a little sensitive - analyzing precious metals
> charts is pretty much the ultimate in superstitious nonsense. <br/>
>
> Oh, and love the internet implication that you've been invested in
> gold since the bottom. That's another "How come the archives only
> go back to 2006?"

May 20 10:19 PM

[Peter Cooper:]

Have a look at the latest gold chart - with the metal above $950 today - it looks well set to break $1000 and head to $1200 - see:
arabianmoney.net/2009/.../

May 22 12:13 AM