Tracking George Soros's Portfolio - Q3 2016 Update

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Includes: ABEO, ABX, AGRO, ALLT, AMAT, AMZN, BAC, CACQ, CBPO, CHDN, CIT, CVS, CZR, DISH, DXJ, EBAY, EEM, ESNT, EXA, EXAR, FXI, GLD, GLPI, HPE, HYG, IMOS, INTC, IWM, LBRDK, LILA, LILAK, MGM, MODN, NFLX, PLCM, PYPL, QTM, ROVI, SPY, SUPV, TIVO, TVPT, UNIT, VMW, W, WMB, WUBA, ZTS
by: John Vincent

Summary

Soros's 13F portfolio decreased from $4.68B to $4B this quarter. The number of positions increased from 173 to 224.

They added Williams Companies & Netflix while dropping Gaming and Leisure Properties.

Puts on the SPDR S&P 500 ETF was reduced while the Puts on the iShares iBoxx Hi Yld Bond ETF and the iShares Russell 2000 ETF were both dropped during the quarter.

This article is part of a series that provides an ongoing analysis of the changes made to George Soros's US stock portfolio on a quarterly basis. It is based on George Soros's regulatory 13F Form filed on 11/14/2016. Please visit our Tracking Soros Fund Management Holdings article for an idea on his investment philosophy and our previous update for the fund's moves during Q2 2016.

Soros Fund Management invests globally and the long positions in the US market reported in the 13F filings represent ~12% of the overall portfolio. The 13F portfolio decreased ~15% this quarter from $4.68B to $4B. The number of positions increased from 173 to 224. Very small stock positions and large debt holdings together account for over ~47% of the 13F holdings. The US long investments are diversified with a large number of very small equity positions, a small number of large equity positions, and a few large debt holdings. As the small positions (<0.5%) do not indicate a clear bias, the focus of this article is on the larger equity positions. The top three individual stocks held are Liberty Broadband (NASDAQ:LBRDK), Adecoagro (NYSE:AGRO), and Williams Companies (NYSE:WMB).

To learn about Soros's distinct trading style and philosophy, check out his "The Alchemy of Finance" and other works.

New stakes:

Netflix Inc. (NASDAQ:NFLX): NFLX is a 1.51% portfolio stake established this quarter at prices between $86 and $100 and the stock is now well above that range at $115.

Williams Companies: WMB is the third-largest individual stock position at 2.44% of the 13F portfolio. It was established at prices between $20 and $31 and the stock currently trades near the top end of that range at $30.29.

iShares China Large Cap ETF (NYSEARCA:FXI), iShares MSCI Emerging Markets ETF (NYSEARCA:EEM), and WisdomTree Japan Hedged Equity (NYSEARCA:DXJ): These are index ETF stakes established this quarter. EEM is a 2.30% portfolio stake while the other two are below 1% each.

Note 1: FXI Common and Calls have seen several previous roundtrips. The latest one was disposed of in Q4 2015. Details follow: A small stake through Calls was established in Q2 2015 at prices between $44 and $53 and more than doubled the following quarter as the stock traded between $33.50 and $46. The position was eliminated in Q4 2015 as the underlying traded between $34.50 and $40.50.

Note 2: EEM Common and Puts have seen several previous roundtrips. The latest one was a fairly large short position through Puts disposed of in Q4 2014. Details follow: EEM Puts at ~7% of the portfolio was the second largest 13F position after SPY Puts in Q3 2014. The vast majority of the stake was purchased in Q2 2014 when the share price traded between $41.56 and $45.85. The entire position was eliminated in Q4 2014 when EEM's share price varied between $37.73 and $42.44.

Bank of America (NYSE:BAC), 58.com (NYSE:WUBA), Hewlett Packard Enterprise (NYSE:HPE), and Intel Corporation (NASDAQ:INTC): These are very small stakes (less than ~1% of the portfolio each) established this quarter.

Stake Disposals:

CIT Group Inc. (NYSE:CIT): CIT was 0.81% of the US long portfolio stake. It was purchased in Q3 2015 at prices between $39.50 and $48.50 and decreased by ~50% the following quarter at prices between $39.50 and $46. The position saw another ~15% trimming last quarter. The disposal this quarter was at prices between $30.50 and $37. The stock currently trades at $40.38.

Essent Group (NYSE:ESNT): Soros had a stake in Essent Group prior to its October 2013 IPO at ~$22.50 per share. Q4 2013 regulatory filings showed him owning ~7.5M shares. Since Q4 2014, the stake had seen selling and it was at ~1.5M shares last quarter. The reduction was at prices between $21 and $29. The elimination this quarter happened at prices between $21 and $28. The stock currently trades at $28.49.

iShares Russell 2000 ETF (NYSEARCA:IWM) Puts: The short position has wavered over the years. The ~5% portfolio stake as of last quarter was built up over the previous three quarters when the underlying traded between $95 and $120. The disposal this quarter happened as the ETF traded between $114 and $126. IWM currently goes for ~$130.

Note: The activity in IWM on its own does not indicate a clear bias as Soros is known to use the index ETF to hedge other parts of his portfolio.

iShares iBoxx Hi Yld ETF (NYSEARCA:HYG) Puts: The ~1.50% nominal short stake through Puts was established last quarter when HYG traded between $81 and $85 and the elimination this quarter was when HYG was between $84 and $87. It is now at $84.86.

Polycom Inc. (NASDAQ:PLCM): The bulk of the 1.91% PLCM stake as of last quarter was from Q4 2013 and Q1 2014 at a cost-basis of around $11.50. Q4 2015 saw a ~18% reduction at prices between $10.42 and $14.04. PLCM was acquired in a PE transaction at $12.50 per share by affiliates of Siris Capital. The transaction closed in September thus eliminating Soros's ~6% ownership stake.

SPDR Gold Trust ETF (NYSEARCA:GLD) Calls: The small 0.65% GLD Calls stake as of last quarter was established in Q1 2016 as the underlying traded between $101 and $122. The position was sold down by ~77% last quarter as the ETF traded between $116 and $127. The disposal this quarter was when GLD was between $125 and $131. GLD currently trades at $117. Soros harvested large short-term profits by playing the uptrend in gold successfully.

Note: GLD has seen several roundtrips in the portfolio over the years.

China Biologic (NASDAQ:CBPO), Wayfair Inc. (NYSE:W) & Calls, and Gaming and Leisure Properties (NASDAQ:GLPI): These small (less than ~1.5% of the portfolio each) stakes were sold out this quarter.

Stake Increases:

Barrick Gold (NYSE:ABX): The ABX stake was the largest individual stock position in the 13F at 5.82% of the portfolio in Q1 2016. It was purchased at prices between $7.38 and $15.18 and almost eliminated last quarter at prices between $13.50 and $21.35. This quarter, the position was built back up to a 1.26% portfolio stake at prices between $17 and $23. The stock is now at $15.60.

Note: ABX has seen several roundtrips in the portfolio over the years.

CVS Health (NYSE:CVS) Calls: The stake was minutely small last quarter. This quarter saw the position build up to a ~1.5% portfolio position as the underlying traded between $89 and $98. CVS currently trades at $74.56.

Liberty Broadband: LBRDK is the largest individual stock position by far in the portfolio at ~16%. The stake was established last quarter at prices between $55.32 and $60.33. The stock is now well above that range at $68.48. This quarter saw a marginal further increase.

MGM Resorts (NYSE:MGM) Puts: This short position was established last quarter as the underlying traded between $21 and $25. This quarter saw the stake build up to a 1.80% portfolio position (~160% increase) as MGM traded between $22.50 and $26.50. It is now at $27.71.

TiVo Corporation (NASDAQ:TIVO) previously Rovi Corp. (NASDAQ:ROVI): TIVO is ~2% of the portfolio stake purchased last quarter at prices between $15 and $20.50. The stock is now at $20.95. This quarter saw a marginal increase.

Note: ROVI has had a previous roundtrip: a small 0.65% portfolio stake was almost eliminated in Q4 2015 at prices between $8.69 and $17.71 and the remnant position was disposed the following quarter.

Amazon.com (NASDAQ:AMZN), Applied Materials (NASDAQ:AMAT), Grupo Supervielle (Pending:SUPV), Liberty Global Lilac (NASDAQ:LILA) (NASDAQ:LILAK), Model N Inc. (NYSE:MODN), and VMware Inc. (NYSE:VMW): These are very small (less than ~1% of the portfolio each) stakes that were increased this quarter.

Stake Decreases:

DISH Network (NASDAQ:DISH) & Calls: DISH was a minute 0.20% of the US long portfolio position as of Q1 2013. The following quarter saw a substantial increase at prices between $36 and $42.50. Q1 2016 saw an almost two-thirds reduction at prices between $39.71 and $57.35. There was an about turn last quarter: ~58% increase at prices between $43.40 and $56.06. The pattern reversed again this quarter: ~85% reduction at prices between $49 and $55. The stock is now at $54.70 and the stake is now minutely small at 0.15%.

eBay Inc. (NASDAQ:EBAY): EBAY is a 0.68% portfolio stake. The original fairly large 5.4M share stake was purchased in Q1 & Q3 2015 at prices between $22.50 and $29. Q4 2015 saw a ~36% reduction at prices between $24 and $29.50 while the following quarter saw a ~8% increase. There was a combined ~78% selling over the last two quarters at prices between $23 and $33. The stock currently trades at $28.33.

Note: The prices quoted above are adjusted for the spinoff of PayPal from eBay.

PayPal Holdings (NASDAQ:PYPL): PYPL is 0.83% of the portfolio position established in Q3 2015 as a result of the spinoff of PayPal from eBay. eBay shareholders received one share of PayPal for each share held. Q4 2015 saw a one-third reduction at prices between $31 and $38 and that was followed with another ~54% reduction the following quarter at prices between $31.20 and $41.32. Last quarter saw another ~40% reduction at prices between $34.20 and $40.31. PYPL currently trades at $39.07. There was a marginal reduction this quarter.

SPDR S&P 500 (NYSEARCA:SPY) Puts: The SPY stake has varied over the years. Recent activity follow: In Q1 2015, the SPY Puts were a large ~11% portfolio stake. The following quarter saw a reversal: The SPY Puts stake was reduced while adding a huge position in SPY Calls. Q3 2015 saw a reduction in both the positions. The net was a very small ~1.46% position in SPY Puts. In Q4 2015, the SPY Calls were sold while SPY Puts were increased significantly. The last two quarters saw a huge increase to a ~18% portfolio stake in the Puts. This quarter saw a ~83% reduction in the Puts and the remaining position is at 3.65% of the portfolio.

Note: The activity in SPY on its own does not indicate a clear bias as Soros is known to use the ETF to hedge other parts of his portfolio.

Zoetis (NYSE:ZTS): ZTS is 1.08% of the US long portfolio stake. The bulk of the position is from Q4 2013 and Q1 2014 when the position was increased by ~160% at an average price of ~$32. Q2 2015 saw a one-third reduction at prices between $44 and $55 while the following quarter saw a ~28% increase at prices between $39.65 and $50.02. Q1 2016 saw a ~31% reduction at prices between $39.33 and $48.01 and that was followed with a ~46% selling last quarter at prices between $44.33 and $48.64. There was a one-third reduction this quarter at prices between $47.50 and $52.50. The stock currently trades at $48.84. Soros is harvesting gains.

Communications Sales & Leasing (NASDAQ:CSAL) and Kraft-Heinz (NASDAQ:KHC) (HNZ): These two very small ~0.50% portfolio stakes saw selling this quarter.

Kept Steady:

Adecoagro S A: AGRO was the largest individual stock position at 5.27% of the US long portfolio as of Q4 2015. It was reduced by ~46% the following quarter at prices between $11.03 and $13.23 and another ~15% last quarter. The original stake is from prior to its IPO. The stock currently trades at around $10.73 compared to the IPO price of $11. The current stake is the second-largest individual stock position at 3.40% of the 13F portfolio.

Caesars Acquisition (NASDAQ:CACQ), Caesars Entertainment (NASDAQ:CZR), ChipMos Tech. (NASDAQ:IMOS), Churchill Downs (NASDAQ:CHDN), and Travelport Worldwide (NYSE:TVPT): These stakes were kept steady this quarter.

Although the relative sizes are very small, it is significant that Soros has significant ownership stakes in the following businesses: Abeona Therapeutics (NASDAQ:ABEO), Allot Communications (NASDAQ:ALLT), EXA Corp. (NASDAQ:EXA), Exar Corporation (NASDAQ:EXAR), Model N, and Quantum Corp. (NYSE:QTM).

The spreadsheet below highlights Soros's significant US long stock positions as of Q3 2016:

Disclosure: I am/we are long BAC, PYPL, INTC.

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.

Editor's Note: This article covers one or more stocks trading at less than $1 per share and/or with less than a $100 million market cap. Please be aware of the risks associated with these stocks.

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