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Tracking George Soros's Portfolio - Q4 2017 Update

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Includes: AABA, AEO, AET, ALLT, AMLP, ATGE, BHC, CBS, CCI, CHDN, CI, CL, CMCSA, CNDT, COL, CPB, CRC, CZR, DIS, EPC, EQT, EXA, EXFO, EXR, FB, FG, GM, GPS, HAL, INXN, IWM, K, KEG, KHC, KRE, KW, LBRDK, LIVN, LRCX, MDLZ, MMYT, MODN, NOMD, NXPI, OSTK, PLAY, PYPL, QCOM, SBAC, SEDG, SIGM, SPY, SREV, T, TEVA, TGT, TIVO, TTWO, TWX, URBN, VIAV, VICI, XLF, XOP, XRX, ZTS
by: John Vincent
Summary

Soros's 13F portfolio value increased from $4.20B to $4.37B this quarter. The number of positions decreased from 227 to 196.

They added Overstock, Kennedy-Wilson, and Alerian MLP while dropping Mondelez and Kraft Heinz.

The short position in Russell 2000 ETF thorugh puts was reduced by half 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 02/14/2018. 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 Q3 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 ~4% this quarter from $4.02B to $4.37B. The number of positions decreased from 227 to 196. Very small stock positions and large debt holdings together account for about one-third of the 13F holdings. The 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), Caesars Entertainment, and Altaba (NASDAQ:AABA).

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

New stakes:

Overstock.com, Inc. (OSTK): OSTK is a fairly large 3.61% of the portfolio position established this quarter at $40.45 per share. It participated in a capital raise through short-term (Jan. 2, 2018, expiry) warrants transaction. The warrants were exercised before expiry to initiate the long position. The stock currently trades at $64.15.

Note: Soros owns 8.99% of Overstock common shares.

Kennedy-Wilson Holdings (KW): KW is a 2.44% portfolio stake established this quarter as a result of the merger of Kennedy-Wilson with Kennedy-Wilson Europe. Soros had a ~12% ownership stake in Kennedy-Wilson Europe for which they received Kennedy-Wilson shares. The stock currently trades at $16.60.

Alerian MLP Alps ETF (AMLP) and Halliburton Co. (HAL) & Calls: AMLP is a ~2% portfolio position purchased this quarter at prices between $9.90 and $11.50, and it is now at $10.61. HAL is a 1.84% stake purchased at prices between $41 and $49, and the stock currently trades at $47.50.

Note: HAL is a good trading stock for Soros. It has seen several roundtrips in the portfolio over the years.

SPDR Regional Banking ETF (KRE), Target Corp. (TGT), FGL Holdings (FG), previously CF Industries, Gap Inc. (GPS), Dave & Buster's (PLAY), Financial Select Sector SPDR ETF (XLF), Walt Disney (DIS) Calls, SPDR Oil & Gas ETF (XOP), LivaNova plc (LIVN), and Extra Space Storage (EXR): These are small (less than ~1% of the portfolio each) new stakes established this quarter.

Stake Disposals:

Campbell Soup (CPB): CPB was a small 0.64% stake established last quarter at prices between $45 and $54 and disposed this quarter at prices between $45 and $50.50. It now goes for $46.17.

Mondelez (MDLZ): MDLZ was a very small 0.34% portfolio stake as of Q3 2016. The following quarter saw a ~50% increase at prices between $40.50 and $46 and that was followed with another ~170% increase in Q1 2017 at prices between $42.50 and $45.50. There was a ~30% further increase last quarter at prices between $40 and $44. The disposal of the ~1.7% portfolio stake this quarter happened at prices between $39.30 and $43.50. The stock is now at $44.14.

Kraft Heinz (KHC): The majority of the 1.26% KHC stake was built during Q2 and Q3 2017 at prices between $81 and $94. The position was eliminated this quarter at prices between $75 and $82. The stock currently trades at $70.80.

Facebook Inc. (FB) & Calls: FB was a minutely small 0.44% portfolio stake as of last quarter. It was sold this quarter at prices between $168 and $183. The original position was from Q4 2016 at prices between $115 and $133. The stake saw a ~25% selling in Q2 2017 at prices between $139 and $155 and that was followed with another ~75% selling in the following quarter at prices between $148 and $174. The stock is now at $177.

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.

PayPal Holdings (PYPL): PYPL was a 0.44% 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% selling at prices between $34 and $40.50. PYPL currently trades at $78.37. There was a ~60% selling last quarter at prices between $53 and $65 and the remaining position was sold this quarter at prices between $64 and $79. Soros harvested huge gains.

S&P 500 SPDR (SPY) Puts & Calls: The positioning through SPY Puts and Calls varies widely almost every quarter. As of Q2 2017, the Puts stake was much larger and so the overall short positioning was at ~7% of the portfolio. Last quarter, the Puts and Calls were sized the same (1.2% of the portfolio) offsetting each other. Both positions were disposed this quarter.

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

Colgate-Palmolive (CL), Conduent (CNDT), Exa Corp (EXA), Kellogg Co. (K), MakeMyTrip (MMYT), and SBA Communications (SBAC): These are very small (less than ~1% of the portfolio each) stakes eliminated this quarter.

Notes: a) Soros had a significant ~12% ownership stake in Exa Corp. Dassault Systems (OTCPK:DASTY) acquired Exa for $24.25 cash and that transaction closed last November thus eliminating this position, b) Conduent is a Xerox (XRX) spinoff that started trading in December 2016, and c) SBA Communications did an REIT conversion transaction in January 2017 - the deal was structured as a merger with its REIT subsidiary.

Stake Increases:

Caesars Acquisition and Caesars Entertainment (CZR): Combined, the stake was at ~4% of the portfolio as of last quarter. Currently, the CZR position is the second-largest stake at ~10% of the portfolio. In October last year, Caesars Entertainment combined with Caesars Acquisition in a merger (bankruptcy court reorg). The terms called for Caesars Acquisition shareholders to receive 1.625 shares of CZR for each share held. The two positions were first purchased in 2013. This quarter saw the stake increased to 34.5M shares (4.9% of the business) as Soros's debt holdings got converted in the reorg.

Note: Part of Caesars Entertainment bankruptcy reorg included the spinoff of VICI Properties (VICI) whereby the creditors received VICI shares. Recently regulatory filings show Soros owning 21.52M shares of VICI Properties (7.17% of business).

NXP Semiconductors (NXPI): The 1.40% NXPI position saw a ~80% increase in Q1 2017 at prices between $96 and $104 and that was followed with another ~45% increase this quarter at prices between $113 and $118. It is now at $119.

Note: NXP Semiconductors is merging with Qualcomm (QCOM) in a $110 per share all-cash deal.

Zoetis (ZTS): ZTS is a 0.69% 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 ~$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 $79.73. There was a ~15% trimming over the last two quarters while this quarter saw a similar increase.

Aetna Inc. (AET), American Eagle Outfitters (AEO), CBS Corp. (CBS), Cigna Corp. (CI), General Motors (GM), InterXion Holding NV (NYSE:INXN), Lam Research (LRCX), Rockwell Collins (COL), SolarEdge (SEDG), and Urban Outfitters (URBN): These very small stakes (less than ~1% of the portfolio each) saw increases this quarter.

Stake Decreases:

Altaba Inc. previously Yahoo: AABA is a large (top three) 4.13% portfolio position established in Q2 2017 at prices between $46 and $56 and increased by ~10% last quarter at prices between $54.50 and $67.50. The stock is now well above that range at $73.51. This quarter saw a ~8% trimming.

iShares Russell 2000 (IWM) Puts: The ~2% of portfolio IWM short position has wavered over the years. Recent activity follow: a large 7.65% stake was built in Q4 2016 as the underlying traded between $115 and $138. There was another roughly one-third increase in the following quarter as IWM traded between $134 and $140. Q2 2017 saw a ~25% reduction as IWM traded between $134 and $142 and that was followed with a ~50% selling last quarter as IWM traded between $135 and $148. This quarter saw a similar reduction at prices between $146 and $154. It currently goes for ~$153.

EQT Corporation (EQT) & Calls: EQT is a 1.71% portfolio stake purchased in Q2 2017 at prices between $50.50 and $64 and increased by ~20% last quarter at prices between $58.50 and $67. There was minor trimming this quarter. The stock is now at $52.55.

TiVo Corporation (TIVO) previously Rovi: TiVo is a 1.37% of the portfolio stake purchased in Q2 2016 at prices between $15 and $20.50. Q1 2017 saw a ~10% increase at prices between $17.90 and $21 and that was followed with a 15% increase in the following quarter at prices between $16 and $20. The stock is now at $14. Last two quarters have seen only minor adjustments.

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.

Comcast Corp. (CMCSA) & Calls: CMCSA is a 0.85% portfolio position purchased last quarter at prices between $37 and $42 and reduced by ~42% this quarter at prices between $35 and $41. The stock currently trades at $39.79.

Time Warner (TWX): The 0.83% TWX position was established in Q4 2016 at prices between $78.50 and $97 and increased by ~30% in Q2 2017 at prices between $97 and $100. There was another ~70% increase last quarter at prices between $99 and $103. The stock is now at $95.37. This quarter saw an about turn: ~60% sold at prices between $87 and $104.

Note: Last October, AT&T (T) agreed to acquire Time Warner in a cash-and-stock deal valued at ~$107.50 (half in cash).

Churchill Downs (CHDN): CHDN is a long-term 0.63% portfolio stake that was kept steady in the last 2+ years. The stock price has almost doubled during that period. Last quarter saw an about turn: ~45% selling at prices between $180 and $208 and that was followed with a similar reduction this quarter at prices between $204 and $236. It currently trades at $264. Soros is harvesting gains.

Viavi Solutions (VIAV) and Edgewell Personal Care (EPC): These two ~1% stakes as of last quarter were both reduced by ~90% this quarter. VIAV was a minutely small position in Q1 2017. The following quarter saw a ~9x stake increase and that was followed with another ~40% increase last quarter at prices between $9 and $11.75. The selling this quarter was at prices between $8.50 and $9.75. The stock is now at $9.93. The EPC position had seen a ~160% increase over the last two quarters at prices between $69.50 and $77.50. The selling this quarter was at prices between $56.50 and $73. It is currently at $53.46.

Adtalem Global Education (ATGE) previously DeVry, Allot Communications (ALLT), Crown Castle Intl. (CCI), Model N Inc. (MODN), Nomad Foods (NOMD), SBA Communications, Take-Two Interactive (TTWO), and Valeant Pharmaceuticals (VRX) Puts: These are very small (less than ~1% of the portfolio each) stakes that saw reductions this quarter.

Notes: a) Soros has significant ownership stakes in the following businesses: ~12% of Exa, ~13% of Sigma Designs (OTC:SIGM), and ~16% of Allot Communications, b) SBA Communications did an REIT conversion transaction in January 2017 - the deal was structured as a merger with its REIT subsidiary, and c) SBAC and Take-Two has returned ~55% and ~81% respectively in the last one year.

Kept Steady:

Liberty Broadband: LBRDK is the largest individual stock position by far at ~15% 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 $92.18.

California Resources Corp. (CRC), Sigma Designs, and Teva Pharmaceutical (TEVA): These are very small (less than ~1% of the portfolio each) stakes that were kept steady this quarter.

Note: Soros has significant ownership, 13% ownership stakes, in Sigma Designs.

Although the relative sizes are very small, it is significant that Soros has significant ownership stakes in the following businesses: Exfo Inc. (EXFO), Key Energy Services (KEG), and ServiceSource International (SREV).

The spreadsheet below highlights Soros's significantly large US long stock positions as of Q4 2017:

George Soros - Soros Fund Management - Q4 2017 13F Report

Disclosure: I am/we are long GM, OSTK. 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.

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