Tracking George Soros's Portfolio - Q2 2017 Update

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Includes: AABA, ABEO, AGRO, ALLT, ATGE, BTI, CACQ, CHDN, CJ, CNDT, CRC, CZR, DXC, EPC, EQT, EXA, EXFO, FB, GS, HPE, IWM, KEG, KHC, LBRDK, LRCX, MDLZ, MGM, MMYT, MODN, NFLX, NOMD, NXPI, ORCL, PYPL, QCOM, QQQ, SBAC, SIGM, SNAP, SPY, SUPV, SYMC, T, TIVO, TMUS, TTWO, TWX, VIAV, VMW, WMB, XLI, XRX, ZTS
by: John Vincent

Summary

Soros' 13F portfolio value increased from $4.96B to $5.62B this quarter. The number of positions decreased from 260 to 203.

They added Altaba and EQT while increasing TiVo and Time Warner.

A large new short position in PowerShares QQQ ETF through Puts was established this quarter. Also, the SPY ETF Puts stake was increased while reducing the Russell 2000 ETF Puts.

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 08/14/2017. 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 Q1 2017.

Soros Fund Management invests globally and the long positions in the US market reported in the 13F filings represent ~15% of the overall portfolio. The 13F portfolio value increased ~13% this quarter from $4.96B to $5.62B. The number of positions decreased from 260 to 203. Very small stock positions and large debt holdings together account for over ~30% 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), Altaba (NASDAQ:AABA), and Caesars Acquisition (NASDAQ:CACQ).

To learn about Soros’ distinct trading style and philosophy, check out his “The Alchemy of Finance” and other works.

New stakes:

PowerShares QQQ (QQQ) Puts and SPDR S&P 500 (SPY) Calls: The ~18% of the portfolio short position in QQQ through Puts is by far Soros’ largest 13F position. It was established as the underlying traded between $130 and $144. It now goes for $144. The 1% long position in SPY through calls was established as SPY traded between $233 and $245. The stake is offset by a much larger short position through Puts on SPY.

Note: The large ETF option positions may not indicate a clear shift in bias as Soros is known to use ETF Puts/Calls to hedge parts of his portfolio.

Altaba Inc. previously Yahoo: AABA is a fairly large ~2.5% portfolio position established this quarter at prices between $46 and $56 and the stock is now above that range at $59.99.

EQT Corporation (EQT) & Calls: EQT is a ~1.2% portfolio stake purchased this quarter at prices between $50.50 and $64 and it currently goes for $61.05.

MGM Resorts (MGM) Puts: The 0.75% short position in MGM through Puts was established as the underlying traded between $27 and $34 and the stock currently trades at $31.59.

Note: These positions are all good trading stocks for Soros. Each has seen several previous round trips in the portfolio over the years.

Stake Disposals:

Adecoagro S.A. (AGRO): AGRO was the largest individual stock position at ~5% of the US long portfolio as of Q4 2015. It was reduced by ~45% the following quarter at prices between $11 and $13.50 and another ~15% in Q2 2016. Last quarter saw another ~25% selling at prices between $10.50 and $12.71 and the disposal this quarter was at prices between $9.82 and $11.70. The original stake is from prior to its IPO. The stock currently trades at around $10.05 compared to the IPO price of $11.

Hewlett Packard Enterprise (HPE): HPE was a small 0.6% stake as of Q4 2016. Last quarter saw a huge ~200% increase to a ~1.5% portfolio stake at prices between $16.50 and $19. This quarter saw the position eliminated at around the same price range. The stock is now at $17.75.

Note: Hewlett Packard Enterprise completed a spin-merger transaction with Computer Sciences Corporation last month. Terms called for HPE shareholders to receive 0.086 shares of the merged entity, DXC Technology (DXC). The prices quoted above are adjusted for this transaction.

Symantec Corporation (SYMC): SYMC saw a ~180% increase last quarter to a 0.74% portfolio stake at prices between $24 and $31. The stake was sold this quarter at prices between $28 and $33. SYMC is currently at $28.41.

C&J Energy Services (CJ), Goldman Sachs (GS) Calls, Grupo Supervielle (SUPV), Industrials SPDR ETF (XLI) Puts, Netflix Inc. (NFLX) & Calls, Oracle Corp. (ORCL) Calls, and VMware Inc. (VMW): These are very small (less than ~0.6% of the portfolio each) stakes disposed of this quarter.

Notes: C&J Energy Services emerged from Chapter 11 bankruptcy in January.

Stake Increases:

SPDR S&P 500 Puts: The large ~8% short position in SPY has varied over the years. Recent activity follow: H1 2016 saw a huge increase to an ~18% portfolio stake as the underlying traded between $187 and $207. Q3 2016 saw an about turn: ~83% reduction and that was followed with a ~25% selling in Q4 2016. Last quarter saw the pattern reverse again: ~150% increase as SPY traded between $225 and $240 and that was followed with a one-third increase this quarter as the underlying traded between $233 and $245. It is now at $247.

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

TiVo Corporation (TIVO) previously Rovi: TiVo is a 1.63% of the portfolio stake purchased in Q2 2016 at prices between $15 and $20.50. Last quarter saw a ~10% increase at prices between $17.90 and $21 and that was followed with a 15% increase this quarter at prices between $16 and $20. The stock is now at $18.30.

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.

Time Warner (TWX): The ~1% TWX position was established in Q4 2016 at prices between $78.50 and $97 and increased by ~8% last quarter. This quarter saw a ~28% increase at prices between $97 and $100. The stock is now at $102.

Note: AT&T (T) is acquiring Time Warner in a cash-and-stock deal valued at ~$107.50 (half in cash).

Mondelez (MDLZ): MDLZ was a very small 0.34% portfolio stake as of Q3 2016. Q4 2016 saw a ~50% increase at prices between $40.50 and $46 and that was followed with another ~170% increase last quarter at prices between $42.50 and $45.50. The stock is now at $43.86 and the stake is at ~1% of the portfolio. There was a ~9% further increase this quarter.

Reynolds American (NYSE:RAI) and NXP Semiconductors (NXPI): These two ~0.70% positions saw significant increases in the last two quarters. The RAI stake was increased by roughly 10x last quarter at prices between $55 and $63 and that was followed with a ~13% increase this quarter. The NXPI position saw an ~80% increase last quarter at prices between $96 and $104 and that was followed with an ~11% increase this quarter. It is now at $113.

Note: Reynolds American merged with British American Tobacco (BTI) in a cash-and-stock deal ($29.44 cash and 0.5260 BTI shares for each RAI held) that closed last month. NXP Semiconductors is merging with Qualcomm (QCOM) in a $110 per share all-cash deal.

Adtalem Global Education (ATGE) previously DeVry, Conduent (CNDT), Edgewell Personal Care (EPC), Kraft Heinz (KHC), MakeMyTrip (MMYT), Nomad Foods (NOMD), and Viavi Solutions (VIAV): These are very small (less than ~0.7% of the portfolio each) stakes that saw increases this quarter.

Note: Conduent is a Xerox (XRX) spinoff that started trading last December.

Stake Decreases:

Liberty Broadband: LBRDK is the largest individual stock position by far at ~12% of the portfolio. The stake was established in Q2 2016 at prices between $55 and $60.50. The stock is now well above that range at $102. There was minor trimming in the last three quarters.

iShares Russell 2000 (IWM) PUTS: The large 6.35% of portfolio IWM short position has wavered over the years. Recent activity follow: a ~5% portfolio stake as of Q2 2016 was built up over the previous three quarters when the underlying traded between $95 and $120. It was disposed in Q3 2016 as the ETF traded between $114 and $126.

The position was rebuilt back up to a large 7.65% stake the following quarter as the underlying traded between $115 and $138. There was another roughly one-third increase last quarter as IWM traded between $134 and $140. This quarter saw a ~25% reduction as IWM traded between $134 and $142. It currently goes for ~$137.

Facebook Inc. (FB) & Calls: FB is a 1.28% of the portfolio stake established in Q4 2016 at prices between $115 and $133. The position saw a ~25% selling this quarter at prices between $139 and $155. The stock is now at $171.

Note: FB is a good trading stock for Soros and has seen several previous roundtrips. The most recent trading pattern follow: Q2 2015 saw a huge build-up to a ~2% portfolio stake at prices between $77.50 and $89. There was a ~30% reduction the following quarter at prices between $82 and $98.50 and that was followed with a ~55% reduction next quarter at prices between $90 and $109. Q1 2016 saw a further ~46% reduction at prices between $94 and $116 and the elimination the following quarter was at prices between $109 and $121.

Williams Companies (WMB): WMB is now at 0.84% of the 13F portfolio. It was established in Q3 2016 at prices between $20 and $31. Q4 2016 saw a ~25% selling at prices between $28 and $32 while there was a ~15% increase last quarter at prices between $28 and $32.50. This quarter saw a ~43% selling at prices between $27.80 and $30.80. The stock currently trades at $29.97.

Zoetis (ZTS): ZTS is a ~0.78% of the US long portfolio stake. The bulk of the position is from Q4 2013 and Q1 2014 when the stake was increased by ~160% at an average price of ~$32. Q1 2016 saw a ~30% reduction at prices between $39 and $48 and that was followed with a ~45% selling the following quarter at prices between $44 and $49. There was a one-third reduction in Q3 2016 at prices between $47.50 and $52.50. The stock currently trades at $61.03. There was a ~13% trimming this quarter.

PayPal Holdings (PYPL): PYPL is a 0.68% of the portfolio position established in Q3 2015 as a result of the spinoff of PayPal from eBay (NASDAQ: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 ~55% reduction the following quarter at prices between $31.20 and $41.32. Q2 2016 saw another ~40% reduction at prices between $34 and $40.50. PYPL currently trades at $59.69. There was a ~13% trimming this quarter.

Lam Research (LRCX): LRCX was a ~1.5% portfolio stake established last quarter at prices between $107 and $129. The position saw a ~75% reduction this quarter at prices between $125 and $165. The stock currently trades at $160 and the stake is now very small at 0.37%. The stock has returned ~52% YTD.

T-Mobile US (TMUS): TMUS saw a ~220% increase in Q4 2016 at prices between $45 and $59. Last quarter saw a ~15% trimming and that was followed with a ~45% selling this quarter at prices between $60 and $68.50. The stock is at $63.88 and the stake is now minutely small at 0.35% of the portfolio.

California Resources Corporation (CRC), Model N Inc. (MODN), Snap Inc. (SNAP), SBA Communications (SBAC), and Take Two Interactive (TTWO): These are very small (less than ~1% of the portfolio each) positions reduced this quarter.

Notes: a) Snap Inc. had an IPO in March. Trading started at $24.50 and currently goes for $12.74, b) Soros controls ~10% of MODN, c) SBA Communications did a REIT conversion transaction in January - the deal was structured as a merger with its REIT subsidiary, and d) Take Two has returned ~84% YTD.

Kept Steady:

Caesars Acquisition: CACQ is a long-term ~1.9% portfolio stake that has been kept relatively steady since its IPO in Q4 2013. The stock has returned ~78% since. It currently trades at $19.10.

Note: Soros controls ~4% of CACQ.

Churchill Downs (CHDN): CHDN is another long-term ~1.3% portfolio stake that was kept steady in the last 2+ years. The stock price has almost doubled during that period. It currently trades at $192.

Caesars Entertainment (CZR) and Key Energy Services (KEG): These are very small (less than ~0.6% of the portfolio each) stakes that were kept steady this quarter.

Note: Soros has a ~6.2% ownership stake in Key Energy Services. It emerged from bankruptcy last December.

Although the relative sizes are very small, it is significant that Soros has significant ownership stakes in the following businesses: Abeona Therapeutics (ABEO), Allot Communications (ALLT), Exa Corp. (EXA), Exfo Inc. (EXFO), and Sigma Designs (SIGM).

The spreadsheet below highlights Soros’s significantly large US long stock positions as of Q2 2017:

George Soros

Disclosure: I am/we are long QCOM.

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.