George Soros is a pessimist and why not? He has been able to produce double digit returns for his Soros Fund Management since 1969. Soros earned the moniker, “The Man Who Broke the Bank of England,” after he brought in $1 billion during 1992’s UK currency crises. He was even able to turn an 8% profit in 2008 when many other funds were reporting huge losses; Soros said he saw the recession coming.
Mark Kingdon founded Kingdon Capital Management in 1983 and has since been able to produce a 32 percent gross average annual return, which translates into 26 percent after fees. Like Soros, Kingdon’s strategy is to hold a broad portfolio, investing in whatever stocks, bonds, currencies and options are likely to bring a strong return, namely those in adverse conditions, instead of relying solely on market inefficiencies.
Here is the list of stocks both hedge fund managers had in common at the end of second quarter:
CompanyName | Ticker | Mark Kingdon | George Soros |
SPDR S & P 500 ETF Puts | 263940 | 538965 | |
ISHARES Russell 2000 Puts | 302585 | 413586 | |
DENDREON CORP | 26425 | 102006 | |
ACACIA RESEARCH CORP | 62373 | 57033 | |
SEAGATE TECHNOLOGY | 14526 | 56945 | |
COMCAST CORP NEW | 53826 | 42317 | |
APPLE INC | 168111 | 23764 | |
C V S CAREMARK CORP | 24051 | 19122 | |
COINSTAR INC | 88960 | 17824 | |
MACYS INC | 26316 | 17640 | |
TIVO INC | 20580 | 17522 | |
FREEPORT MCMORAN | 52900 | 15918 | |
POTASH CORP | 39893 | 15484 | |
GREENBRIER COS. | 13832 | 14820 | |
PFIZER INC | 55682 | 11728 | |
UNITEDHEALTH GROUP | 12895 | 11028 | |
B E AEROSPACE INC | 10203 | 8321 | |
CHICAGO BRIDGE & IRON | 15560 | 7780 | |
PETROHAWK ENERGY | 32071 | 7660 | |
CABLEVISION SYSTEMS | 28968 | 6139 | |
ROVI CORP | 51624 | 5746 | |
E N S C O PLC | 31980 | 5522 | |
AMARIN CORP PLC | 11176 | 4124 | |
U S BANCORP DEL | 25510 | 3163 | |
CITIGROUP INC | 118674 | 2690 | |
HCA HOLDINGS INC | 22440 | 2445 | |
CATERPILLAR INC | 21292 | 2363 | |
MASTERCARD INC | 10999 | 1170 | |
JPMORGAN CHASE | 102350 | 569 |
Both managers maintain a high volume of options in their portfolios. For instance, both Soros and Kingdon hold large put option positions in iShares Russell 2000 (IWM), holding $413 million and $302 million respectively. IShares is Kingdon’s largest position and Soros’s second largest. IShares is down drastically; it lost almost 22% since the end of June.
Soros’s largest position is in another put option – namely SPDR S&P 500 ETF (SPY). Soros had a $539 million put position to hedge his bets. Kingdon is also bullish about it, only slightly less; he holds a $264 million position. Several investors increased their put positions or initiated new positions just before the huge decline in the market last quarter.
Soros and Kingdon are also bullish about Apple, Inc. (AAPL), and they have done markedly better on it, gaining 13.6% since the end of June. Soros owns $23.7 million in company while Kingdon holds $168 million. Apple is the darling of several funds, including Julian Robertson of Tiger Management and Phillippe Lafont’s Coatue Management.
Soros and Kingdon lost 38.46% on their respective Citigroup, Inc. (C) positions since the end of the second quarter. Soros owns $2.7 million, while Kingdon owns $118.6 million position. Citigroup may have produced some major losses but it is still a popular stock with fund managers. For instance, Bill Ackman, Pershing Square invested 15% of his portfolio in Citigroup at the end of June.
Dendreon Corp (DNDN) also figures prominently in Soros’ and Kingdon’s respective portfolios, Soros had $102 million and Kingdon had over $26 million in the stock. This stock has generated severe losses, losing 77.18% since the end of June. Steve Cohen’s SAC Capital Advisors kept 2% of its 13F portfolio in the company and was the biggest loser during the past quarter among the 300+ hedge funds we are tracking.
Soros and Kingdon share common positions in Acacia Research Group Corp (ACTG), which has been outperforming the market by over 10% since the end of the second quarter (-1.91% vs. -13.82%). Soros owns a $57 million stake in the company while Kingdon is slightly bullish at $62 million. TCS Capital Management’s Eric Semler is also a fan.
The pair also share positions in Seagate Technology (STX). Seagate has lost 35.51% since the end of June. Soros’ position in the stock was $56.9 million and Kingdon had only $14.5 million invested at the end of June. Seagate is a favorite of David Einhorn, Greenlight Capital; Einhorn increased his position in Seagate by 252% during the second quarter.
