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Former analyst for Connecticut General and current serial entrepreneur with over 40 years experience building companies. Background includes a masters degree in economics from the University of Connecticut and experience taking several companies public. Educational and professional experience... More
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  • George Soros Bets on Inflation and A Weaker Dollar 0 comments
    Mar 17, 2010 12:11 PM
    Soros Fund Management LLC, 4Q SEC Form 13-F, December 31, 2009, filed February 16, 2010, reports a total portfolio of $8.849.3 billion and 716 securities.   The portfolio weightings are a good insight into the macro economic trends that are driving George Soros’s investment strategy.
     
    Oil and Gas investments of $2.078.1 billion in $millions are: Suncor Energy (NYSE:SU), $252.9; Weatherford International (WFI), $132.3; Plains Exploration & Production (NYSE:PXP), $193.0; Hess Corp (NYSE:HES), $348.7; Petroleo Brasileiro SA Petrobr (NYSE:PBR), $368.7; Petroleo Brasilerio SA Petrobr (PBR-A), $249.5; and Interoil Corp (NYSE:IOC), $214.5. Total portfolio weighting for oil and gas 23.5%.
     
    Gold investments are primarily the SPDR Gold Trust (NYSEARCA:GLD), $664.1, and direct equity investments in gold miners, like Freeport-McMoran Copper & Gold (NYSE:FCX), of $66.8 for a total gold investment of $730.9 and weighting of 8.3%. Precious metals investments other than gold are nominal.
     
    George Soros’s oil and gas and gold investment of $2.809.0 billion weights the portfolio 31.7% for those assets.   Both of these sectors will benefit from inflation and/or the depreciation of the U.S. dollar. (The positive price impact of random international crises on the price of oil and gold is a free insurance policy for this natural resources and gold strategy.)
     
    On Friday, the U.S. Treasury sold $13 billion of 30-year U.S. Treasury Bonds at a yield of 4.679% compared to the forecasted 4.702% rate. Direct bidders bought 29.6% of the government securities, which was the highest direct bidders participation since February 2006. The low 4.679% rate and high direct demand for the 30-year Treasury Bonds reflect institutional investor expectations for a low inflation environment in the future. 
     
    By putting 31.7% of his assets in gold and in oil and gas, George Soros placed a $2.809.0 billion bet on inflation and a weaker dollar. Americans can hope that his bet won’t pay off and root for the buyers of 30-year government securities, however in light of U.S. Government’s ever increasing size, budget deficits, debt and push for big government programs, any house would place the odds in Soros’s favor.


    Disclosure: Long SU
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