Tracking George Soros's Portfolio - Q2 2018 Update

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Includes: AABA, AET, AMZN, BAC, BAX, C, CCI, CI, CNQ, COL, COUP, CRM, CVX, CZR, DISCA, EA, EQT, ETFC, FG, GLIBA, GM, I, INXN, JPM, KRE, KW, LBRDK, LGF.A, LH, LIVN, LPLA, LRCX, MRVL, NFLX, NOW, NXPI, P, QCOM, QQQ, RING, SBAC, SEDG, SIGM, SPOT, SPY, T, TGT, TIVO, TMO, TWX, VICI, VR, WFC, XL, XOP, ZAYO
by: John Vincent
Summary

Soros' 13F portfolio value increased from $6.16B to $6.25B this quarter. The number of positions decreased from 219 to 203.

The net short position in SPDR S&P 500 through Puts was increased significantly during the quarter.

Liberty Broadband at ~9% 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's 13F stock portfolio on a quarterly basis. It is based on George Soros's regulatory 13F Form filed on 08/16/2018. 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 Q1 2018.

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 marginally this quarter from $6.16B to $6.25B. The number of positions decreased from 219 to 203. Very small stock positions and large debt holdings together account for ~32% 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:

AT&T Inc. (T): T is a fairly large ~3% of the portfolio stake established this quarter. Soros had a position in Time Warner (NYSE:TWX) and AT&T's deal ($107.50 per share, half cash) for Time Warner closed in June. The stock is currently at $31.94 and it traded between $31.50 and $36 during the quarter.

Spotify (SPOT) and Pandora (P): SPOT is a ~2% of the portfolio position. It had an IPO in April and started trading at ~$135 per share. The stock is now well above that at $189. The 0.90% Pandora stake was purchased at prices between $4.50 and $8.50 and it is currently above that range at $9.24.

Chevron (CVX) & Calls and Coupa Software (COUP): CVX is a 1.14% of the portfolio position purchased at prices between $112 and $130, and the stock is now at ~$119. The very small COUP stake was established at prices between $44.50 and $64.50 and it is currently well above that range at $71.71.

Stake Disposals:

Kennedy-Wilson Holdings (KW): KW was a 1.67% portfolio stake established in Q4 2017 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 $21.45. There was a ~4% trimming last quarter, and the disposal this quarter was at prices between $17.50 and $21.50.

PowerShares QQQ (QQQ) Puts: The positioning through Index ETF Puts & Calls varies widely almost every quarter. 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. The net short position in QQQ as of last quarter was ~1.25% of the portfolio. It was disposed this quarter.

Time Warner (TWX): A 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. Q4 2017 saw an about turn: ~60% sold at prices between $87 and $104. The pattern reversed again last quarter: ~130% increase at prices between $91.50 and $97. AT&T agreed to acquire Time Warner in a cash-and-stock deal worth ~$107.50 (half in cash) per share and transaction closed in June.

Baxter International (BAX), Cigna Corp. (CI), Crown Castle Intl. (CCI), General Motors (GM), InterXion Holding NV (NYSE:INXN), Lam Research (LRCX), Laboratory Corp (LH), LivaNova plc (LIVN), SBA Communications (SBAC), SolarEdge (SEDG), SPDR Regional Banking ETF (KRE), SPDR Oil & Gas ETF (XOP), Target Corp. (TGT), Thermo Fisher Scientific (TMO), and Zayo Group Holdings (ZAYO): These very small (less than ~1% of the portfolio each) positions were eliminated 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 ~50% since.

Stake Increases:

SPDR S&P 500 (SPY) Puts: The short position through SPY Puts is at ~10% currently. The net short after offsetting corresponding long stake is 7.31%. SPY traded between $257 and $279 during the quarter and is currently at $290.

NXP Semiconductors (NXPI): The fairly large 3.36% NXPI position saw a ~80% increase in Q1 2017 at prices between $96 and $104 and that was followed with another ~45% increase in Q4 2017 at prices between $113 and $118. There was a ~45% increase last quarter at prices between $115 and $126 and that was followed with a ~150% increase this quarter at prices between $92 and $120. It is now at $93.14.

Note: NXP Semiconductors was to merge with Qualcomm (QCOM) at $127.50 per share cash, but that transaction fell through in July.

Rockwell Collins (COL): The COL stake was increased by ~165% last quarter at prices between $133 and $139. That was followed with a ~14% increase this quarter. The stock is now at $136.

Note: In September last year, United Technologies (NYSE:UTX) 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).

XL Group (XL): XL is another merger-arbitrage stake established last quarter and increased by ~80% this quarter. The stock currently trades at $57.39. In March, AXA (OTCQX:AXAHF) agreed to acquire XL Group for $57.60 per share cash.

ServiceNow Inc. (NOW), LPL Financial (LPLA), Canadian Natural Resources (CNQ) Calls, Intelsat SA (I) & Calls, Electronic Arts (EA), RingCentral Inc. (RING), Salesforce.com (CRM), E*Trade Financial (ETFC) & Calls, and Marvell Technology (MRVL): These very small (less than ~0.60% of the portfolio each) stakes saw substantial increases this quarter.

Note: Intelsat has returned a whopping ~500% since April.

Stake Decreases:

Liberty Broadband (LBRDK): LBRDK is the largest individual stock position by far at ~9% 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 $81.09. There was marginal trimming in the last two quarters. For investors attempting to follow Soros, Liberty Broadband is a good option to consider for further research.

Altaba Inc. (AABA) previously Yahoo: AABA is a large (top five) 3.16% 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 $69.55. Q4 2017 saw a ~8% trimming while last quarter there was a similar increase. There was a ~4% trimming this quarter.

Aetna Inc. (AET): The 1.51% AET stake was built over the two quarters through Q1 2018 at prices between $151 and $194. The stock currently trades at ~$200. There was a ~6% trimming this quarter.

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).

JPMorgan Chase (JPM): The ~1.1% JPM stake was acquired last quarter at prices between $107 and $119 and it currently trades at $115. There was a ~9% trimming this quarter.

Bank of America (BAC) and Netflix Inc. (NFLX): These small positions (less than 1% of the portfolio each) saw large increases last quarter but were reduced this quarter. The ~1.2% BAC position saw a whopping ~815% increase last quarter at prices between $30 and $33, and the stock is now at $30.93. This quarter saw a ~11% trimming. NFLX is a 1.06% stake that saw a ~205% increase last quarter at prices between $201 and $331. It currently trades at $368. There was a ~45% reduction this quarter at prices between $280 and $417.

Amazon.com (AMZN) & Calls and Wells Fargo (WFC): These small positions (~1% of the portfolio each) established last quarter saw significant selling this quarter. AMZN is a 0.81% of the portfolio position purchased at prices between $1,180 and $1,600 and it is now at $2,013. This quarter saw a ~42% selling at prices between $1,372 and $1,750. The 0.84% WFC stake was established at prices between $51 and $66 and it currently goes for $58.48. This quarter saw a ~16% trimming.

EQT Corporation (EQT) & Calls: EQT is a 0.53% 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 last quarter at prices between $45.50 and $59 and that was followed with a ~42% reduction this quarter at prices between $46 and $57. The stock is now at $51.02.

Citigroup (C), Discovery Communications (DISCA), FGL Holdings (FG), previously CF Industries, GCI Liberty (GLIBA), and Lions Gate Entertainment (LGF.A): These are very small (less than 0.60% of the portfolio each) stakes that saw reductions this quarter.

Kept Steady:

VICI Properties (VICI): 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 7.10% 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 $20.91.

Caesars Entertainment (CZR): 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 $10.20.

Sigma Designs (SIGM), TiVo Corporation (TIVO) previously Rovi, and Validus Holdings (VR): These are very small (less than 0.75% of the portfolio each) stakes kept steady this quarter.

Note 1: Validus Holdings is a merger-arbitrage stake: In January, AIG (NYSE:AIG) agreed to acquire Validus Holdings (VR) for $68 per share cash.

Note 2: TiVo (Rovi at the time) 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.

Note 3: Soros has 13% ownership stakes in Sigma Designs.

The spreadsheet below highlights Soros's significantly large 13F positions as of Q2 2018:

George Soros - Soros Fund Management - Q2 2018 13F Report

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

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 microcap stocks. Please be aware of the risks associated with these stocks.