Tracking George Soros' Portfolio - Q1 2018 Update

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Includes: AABA, AET, AMZN, BAC, COL, CZR, JPM, KW, LBRDK, NFLX, NXPI, TWX, VICI, WFC
by: John Vincent
Summary

Soros' 13F portfolio value increased from $4.37B to $6.16B this quarter. The number of positions increased from 196 to 219.

Short positions in SPDR S&P 500 and PowerShares QQQ index ETFs through Puts were added during the quarter.

Liberty Broadband at ~11% of the portfolio is the largest individual stock position.

This article is part of a series that provides an ongoing analysis of the changes made to George Soros' 13F stock portfolio on a quarterly basis. It is based on George Soros' regulatory 13F Form filed on 05/15/2018. 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 Q4 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 ~40% this quarter from $4.37B to $6.16B. The number of positions increased from 196 to 219. Very small stock positions and large debt holdings together account for ~37% 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), VICI Properties (NYSE:VICI), and Caesars Entertainment (NASDAQ:CZR).

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

New stakes:

VICI Properties: In October last year, Caesars Entertainment combined with Caesars Acquisition in a merger (bankruptcy court reorg). The bankruptcy reorg included the spinoff of VICI Properties whereby the creditors received VICI shares. The 6.40% of the portfolio position (~7% of the business) came about as a result of this transaction - Soros had huge stakes (both equity and debt) in the parent businesses. The stock started trading at $18 per share and currently goes for $19.65.

SPDR S&P 500 (NYSEARCA:SPY) Puts and PowerShares QQQ (NASDAQ:QQQ) Puts: The positioning through Index ETF Puts & Calls varies widely almost every quarter. Currently, the short positions through SPY and QQQ Puts are at 3.25% and 1.25% of the portfolio respectively (the percentages are adjusted to reflect Calls that partially offset the short stance).

Note: Soros is known to use these ETFs to hedge other parts of his portfolio. As such, the positions do not indicate a clear market bias.

JPMorgan Chase (NYSE:JPM), Amazon.com (NASDAQ:AMZN) and Calls, and Wells Fargo (NYSE:WFC): These small positions (~1% of the portfolio each) were established this quarter. The ~1.3% JPM stake was acquired at prices between $107 and $119, and it currently trades at $113. AMZN is 1.20% of the portfolio position purchased at prices between $1,180 and $1,600, and it is now at $1,587. The ~1% WFC stake was established at prices between $51 and $66 and it currently goes for $55.04.

Citigroup (NYSE:C), GCI Liberty (NASDAQ:GLIBA), XL Group (NYSE:XL), Validus Holdings (NYSE:VR), and Discovery Communications (NASDAQ:DISCA): These are very small (less than 0.75% of the portfolio each) stakes established during the quarter.

Note: Validus Holdings and XL Group positions are merger-arbitrage stakes: In January, AIG agreed to acquire Validus Holdings for $68 per share cash. In March, AXA agreed to acquire XL Group for $57.60 per share cash.

Stake Disposals:

Overstock.com Inc. (NASDAQ:OSTK): OSTK was a fairly large 3.61% of the portfolio position established last 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 disposal this quarter was at prices between $33 and $88. The stock currently trades at $37.90.

Note: Soros had a ~9% ownership stake in Overstock.

Halliburton Co. (NYSE:HAL) and Calls: HAL was a 1.84% stake purchased last quarter at prices between $41 and $49 and eliminated this quarter at prices between $44.50 and $57. The stock currently trades at $52.97.

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

iShares Russell 2000 (NYSEARCA: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 the following quarter as IWM traded between $135 and $148. Last quarter saw a similar reduction at prices between $146 and $154. The disposal this quarter happened as the underlying traded between $145 and $161. It currently goes for ~$161.

Comcast Corp. (NASDAQ:CMCSA) and Calls: CMCSA was a 0.85% portfolio position purchased in Q3 2017 at prices between $37 and $42 and reduced by ~42% last quarter at prices between $35 and $41. The remaining stake was sold out this quarter at prices between $33 and $43. The stock currently trades at $32.55.

American Eagle Outfitters (NYSE:AEO), CBS Corp. (NYSE:CBS), Dave & Buster's (NASDAQ:PLAY), Walt Disney (NYSE:DIS) Calls, Extra Space Storage (NYSE:EXR), Gap Inc. (NYSE:GPS), and Select Financial SPDR ETF (NYSEARCA:XLF): These very small positions (less than ~0.75% of the portfolio each) were disposed this quarter.

Stake Increases:

Altaba Inc. (NASDAQ:AABA) previously Yahoo: AABA is a large (top three) 3.40% portfolio position established in Q2 2017 at prices between $46 and $56 and increased by ~10% the following quarter at prices between $54.50 and $67.50. The stock is now well above that range at $77.02. Last quarter saw a ~8% trimming while this quarter there was a similar increase.

Aetna Inc. (NYSE:AET): The 1.5% AET stake was built over the last two quarters at prices between $151 and $194. The stock currently trades at ~$177.

Note: Last December, CVS agreed to acquire Aetna in a cash-and-stock deal ($145 per share in cash and 0.8378 CVS shares for each share held).

NXP Semiconductors (NASDAQ:NXPI): The 1.45% NXPI position saw a ~80% increase in Q1 2017 at prices between $96 and $104 and that was followed with another ~45% increase last quarter at prices between $113 and $118. There was a ~45% increase this quarter at prices between $115 and $126. It is now at $109.

Note: NXP Semiconductors is merging with Qualcomm (NASDAQ:QCOM) in a $127.50 per share all-cash deal.

Time Warner (NYSE:TWX): The 1.39% 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 in Q3 2017 at prices between $99 and $103. Last quarter saw an about turn: ~60% sold at prices between $87 and $104. The pattern reversed again this quarter: ~130% increase at prices between $91.50 and $97. The stock is now at $94.19.

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

Rockwell Collins (NYSE:COL), Bank of America (NYSE:BAC), and Netflix Inc. (NASDAQ:NFLX): These small positions (less than 1.5% of the portfolio each) saw large increases this quarter. The COL stake was increased by ~165% to a 1.22% portfolio stake at prices between $133 and $139, and it is now at $135. The ~1.2% BAC position saw a whopping ~815% increase this quarter at prices between $30 and $33, and the stock is now at $31.06. NFLX is a 1.06% stake that saw a ~205% increase this quarter at prices between $201 and $331. It currently trades at $328.

Note: In September last year, United Technologies agreed to acquire Rockwell Collins in a cash-and-stock deal valued at $140 per share ($93.33 per share in cash and the rest in stock subject to a 7.5% collar).

Baxter International (NYSE:BAX), Cigna Corp. (NYSE:CI), Lam Research (NASDAQ:LRCX), Laboratory Corp. (NYSE:LH), Lions Gate Entertainment (NYSE:LGF.A), SBA Communications (NASDAQ:SBAC), Thermo Fisher Scientific (NYSE:TMO), and Zayo Group Holdings (NYSE:ZAYO): These very small (less than ~1% of the portfolio each) positions saw increases this quarter.

Notes: SBA Communications did a REIT conversion transaction in January 2017 - the deal was structured as a merger with its REIT subsidiary. The stock has returned ~55% since.

Stake Decreases:

Liberty Broadband: LBRDK is the largest individual stock position by far at ~11% 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 $72.26. There was a marginal trimming this quarter. For investors attempting to follow Soros, Liberty Broadband is a good option to consider for further research.

Kennedy-Wilson Holdings (NYSE:KW): KW is a 1.67% portfolio stake established last 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 $20. There was a ~4% trimming this quarter.

EQT Corporation (NYSE:EQT) and Calls: EQT is a 0.80% portfolio stake purchased in Q2 2017 at prices between $50.50 and $64 and increased by ~20% the following quarter at prices between $58.50 and $67. There was a ~22% selling this quarter at prices between $45.50 and $59. The stock is now at $53.55.

TiVo Corporation (NASDAQ:TIVO) previously Rovi: TiVo is a 0.51% 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. This quarter saw a ~40% selling at prices between $13 and $15.50. The stock is now at $14.80.

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.

Churchill Downs (NASDAQ:CHDN): CHDN is a long-term position that was almost sold out this quarter. The stake was kept steady during the two-year period through Q2 2017 when the stock had doubled. Q3 2017 saw an about turn: ~45% selling at prices between $180 and $208 and that was followed with a similar reduction last quarter at prices between $204 and $236. The stake was reduced by ~85% this quarter at prices between $235 and $274. It currently trades at $306. Soros harvested long-term gains.

Alerian MLP Alps ETF (NYSEARCA:AMLP), Allot Communications (NASDAQ:ALLT), California Resources Corp. (NYSE:CRC), Crown Castle Intl. (NYSE:CCI), FGL Holdings (NYSE:FG) previously CF Industries, General Motors (NYSE:GM), LivaNova plc (NASDAQ:LIVN), SolarEdge (NASDAQ:SEDG), SPDR Regional Banking ETF (NYSEARCA:KRE), SPDR Oil & Gas ETF (NYSEARCA:XOP), Take-Two Interactive (NASDAQ:TTWO), Target Corp. (NYSE:TGT), Teva Pharmaceutical (NYSE:TEVA), Urban Outfitters (NASDAQ:URBN), and Valeant Pharmaceuticals (VRX) Puts: These are very small (less than ~1% of the portfolio each) stakes that saw reductions this quarter.

Notes: Take-Two has returned ~130% in the last fifteen months.

Kept Steady:

Caesars Entertainment: Currently, the CZR position is the third-largest stake at ~6% 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. Last quarter saw the stake increased to 34.5M shares (4.9% of the business) as Soros' debt holdings got converted in the reorg. The stock currently trades at $13.20.

InterXion Holding NV (NASDAQ:XON) and Sigma Designs (SIGM): These are very small (less than ~0.5% of the portfolio each) stakes that were kept steady this quarter.

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

The spreadsheet below highlights Soros' significantly large US long stock positions as of Q1 2018:

George Soros - Soros Fund Management - Q1 2018 13F Report

Disclosure: I am/we are long BAC, GM, VRX, 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.