Tracking George Soros's Portfolio - Q4 2018 Update

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Includes: AABA, ADM, ALLT, AMZN, BAC, CAG, CMA, COUP, CRM, CZR, DIS, DVN, EA, EEM, EMB, ENR, EQT, ESRX, ETFC, ETRN, GLIBA, GOOG, GOOGL, HSY, I, IBM, IWB, JPM, KHC, LBRDK, LGF.A, LPLA, MCK, MDLZ, MRVL, MSFT, NFLX, NRG, NXST, P, PM, QQQ, RHT, RNG, S, SIRI, SPOT, SPY, T, TMUS, TRCO, UNH, VICI, VZ, XLE, XOP
by: John Vincent
Summary

Soros' 13F portfolio value decreased from $4.56B to $3.30B this quarter. The number of positions decreased from 189 to 165.

Soros added Philip Morris and Verizon, while increasing Mondelez. The small net long position in S&P 500 Index and Nasdaq 100 Index was turned into a medium-sized net short position.

At ~16% of the portfolio, Liberty Broadband 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 02/14/2019. 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 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 decreased ~28% this quarter from $4.56B to $3.30B. The number of positions decreased from 189 to 165. Very small stock positions and large debt holdings together account for ~30% 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 (LBRDK), VICI Properties (VICI), and Caesars Entertainment (CZR). To learn about Soros’ distinct trading style and philosophy, check out his The Alchemy of Finance and other works.

New stakes

Philip Morris International (PM), Verizon Communications (VZ), Red Hat Inc. (RHT), Conagra Foods (CAG), and Energizer Holdings (ENR): These are the new individual stock positions this quarter. PM is a 1.19% portfolio position established at prices between $66 and $91, and the stock currently trades at $85.04. The ~1% VZ stake was purchased at prices between $53 and $61, and it is now at $55.76. RHT is a merger arbitrage stake established this quarter - IBM Corp. (IBM) is buying Red Hat for $190 per share cash. The stock currently trades at $182. The 0.73% CAG position was established as a result of the merger with Pinnacle Foods. Soros had a position in Pinnacle Foods for which he received CAG shares in the ration 1:0.6494. Soros also increased the stake during the quarter. ENR is a 0.70% stake purchased at prices between $43 and $62, and it is now at ~$46.

Invesco QQQ (QQQ) Puts and iShares Russell 1000 ETF (IWB): The 1.60% short stake in QQQ was established as the underlying traded between $144 and $186, and it currently trades at $172. IWB is a 1.20% long position purchased this quarter at prices between $130 and $162, and it is now at $155.

Note: Soros uses ETFs to hedge other parts of his portfolio, and so, the ETF trades do not indicate a clear bias.

Stake Disposals

Devon Energy (DVN) & Calls, Microsoft Corp. (MSFT), Pinnacle Foods, and iShares MSCI Emerging ETF (EEM): These four positions saw large increases last quarter but were disposed this quarter. The ~1.6% DVN stake was increased by ~160% at prices between $38.50 and $45.5. The position was disposed this quarter at prices between $21 and $41. The stock currently trades at $30.27. The 1.21% MSFT position saw a whopping ~800% increase last quarter at prices between $99 and $115, but was disposed this quarter at prices between $94 and $116. It currently trades at ~$107. Pinnacle Foods was a merger arbitrage stake that saw a ~500% increase last quarter. Conagra agreed to acquire Pinnacle Foods in June, and the transaction closed in October last year. The 1.2% EEM stake saw a ~550% increase last quarter at prices between $41 and $45. It was disposed this quarter at prices between $38 and $43. It currently goes for $42.66.

Spotify Technology (SPOT): SPOT is a ~1% of the portfolio position. It had an IPO in April 2018 and started trading at ~$135 per share. The position was reduced by ~63% last quarter at prices between $169 and $196 and disposed this quarter at prices between $107 and $180. The stock is now at ~$148.

Aetna Inc.: The 1.51% AET stake was built over the two quarters through Q1 2018 at prices between $151 and $194. There was a ~6% trimming in Q2 2018 and a one-third reduction last quarter at prices between $185 and $206. In December 2017, CVS Health Corp. (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), and that transaction closed last November, thus eliminating this position.

EQT Corporation (EQT) & Calls: EQT was a 0.60% portfolio stake purchased in Q2 2017 at prices between $30 and $33.50, and increased by ~20% the following quarter at prices between $38.50 and $46.50. There was a ~22% selling in Q1 2018 at prices between $25 and $38.50, and that was followed with a ~42% reduction next quarter at prices between $25.50 and $36.50. The disposal this quarter was at prices between $16.50 and $26. The stock is now at $19.35.

Note: The prices quoted above are adjusted for the Equitrans Midstream Corp. (ETRN) spinoff this month.

Electronic Arts (EA), Express Scripts (ESRX), iShares J.P. Morgan USD Emerging Markets Bond ETF (EMB) Puts, and Netflix Inc. (NFLX): These very small (less than ~0.70% of the portfolio each) stakes were disposed this quarter.

Stake Increases

Mondelez International (MDLZ), T-Mobile US (TMUS), McCormick (MCK), Alphabet (GOOG), NRG Energy (NRG), and UnitedHealth Group (UNH): These six positions saw large increases this quarter. The 1.58% MDLZ stake saw a ~140% increase this quarter at prices between $39.50 and $45, and the stock currently trades at ~$48. The TMUS position was increased by ~800% this quarter to a ~1% portfolio stake at prices between $61 and $70, and it is now at $72.75. MCK is a 0.91% portfolio position that saw a ~250% increase this quarter at prices between $108 and $137, and it currently trades at $134. The small 0.70% GOOG stake saw an ~80% increase this quarter at prices between $976 and $1203, and it is now at $1114. NRG is a 0.69% portfolio position that saw a ~135% increase this quarter at prices between $35 and $43, and it currently trades at $42.06. The small 0.64% UNH stake was doubled this quarter at prices between $233 and $286, and it is now at ~$270.

SPDR S&P 500 (SPY) Calls & Puts: The net short position through SPY Calls & Puts is now at 2.22% of the portfolio. It was a small net long position as of last quarter. SPY traded between $271 and $294 last quarter and between $234 and $292 this quarter. It is currently at ~$278.

Coupa Software (COUP): The 1.16% COUP stake was established in Q2 2018 at prices between $44.50 and $64.50, and increased by ~14% last quarter at prices between $61 and $81. It is currently well above those ranges at $93.82. This quarter also saw a ~7% stake increase.

GCI Liberty (GLIBA), Hershey Company (HSY), and E*Trade Financial (ETFC): These three small (less than ~1% of the portfolio each) stakes saw substantial increases this quarter. The GLIBA position was increased by ~45%, while the HSY and ETFC stakes saw ~30% increases each.

Lions Gate Entertainment (LGF.A) and SVB Financial: These two very small (less than ~0.70% of the portfolio each) stakes were increased this quarter. The Lions Gate position saw a ~15% stake increase and the SVB Financial position saw a ~4% increase.

Stake Decreases

VICI Properties and Caesars Entertainment: In October 2017, 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 11.89% of the portfolio position (~7% of the business) in VICI 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 $21.49. The CZR position is currently the third-largest stake at ~7% of the portfolio. The reorg terms also called for Caesars Acquisition shareholders to receive 1.625 shares of CZR for each share held. Q1 2018 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 $9.62. Both positions saw minor trimming this quarter.

Altaba Inc. (AABA) (previously Yahoo): AABA is a fairly large (top-five) 4.5% 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 above those ranges at $69.40. The last three quarters have seen minor trimming.

Amazon.com (AMZN) & Calls: AMZN is now a small ~0.73% of the portfolio position. It was purchased in Q1 2018 at prices between $1180 and $1600. The following quarter saw a ~42% selling at prices between $1372 and $1750, and that was followed with another ~25% selling last quarter at prices between $1694 and $2040. This quarter saw a similar reduction at prices between $1344 and $2004. The stock is now at $1622.

AT&T Inc. (T): T was a fairly large ~3% of the portfolio stake established in Q2 2018. Soros had a position in Time Warner, and AT&T’s deal ($107.50 per share, half cash) for Time Warner closed in June. The position saw a ~75% selling last quarter at prices between $30 and $34. There was another ~50% reduction this quarter at prices between $27 and $34. The stock is now at $30.85.

JPMorgan Chase (JPM): The ~0.63% JPM stake was acquired in Q1 2018 at prices between $107 and $119. Last quarter saw the position reduced by ~60% at prices between $104 and $119. It currently trades at ~$106. This quarter also saw a ~20% selling.

Walt Disney (DIS) and SPDR Oil & Gas Exploration (XOP) & Calls: DIS is a 0.59% position purchased last quarter at prices between $104 and $117, and reduced by ~40% this quarter at prices between $100 and $119. It is now at ~$114. The 0.55% XOP stake was established last quarter at prices between $39 and $45, and reduced by ~30% this quarter at prices between $24 and $45. It currently trades at $31.22.

Pandora (P): The 0.52% Pandora stake was purchased in Q2 2018 at prices between $4.50 and $8.50, and reduced by ~25% next quarter at prices between $6.75 and $10. This quarter saw another ~60% selling at prices between $5.25 and $6.40.

Note: In September last year, Sirius XM (SIRI) agreed to acquire Pandora in a stock deal (1.44 shares of SIRI for each P held), and that transaction closed earlier this month. SIRI currently trades at ~$6.

Bank of America (BAC): The 0.48% BAC position saw a whopping ~815% increase in Q1 2018 at prices between $30 and $33. It saw a ~55% selling last quarter at prices between $27.75 and $31.80, and that was followed with a one-third reduction this quarter at prices between $22.75 and $30.50. The stock is now at $29.41.

Tribune Media (TRCO), Archer Daniels Midland (ADM), and Kraft Heinz (KHC): These three positions established last quarter were reduced to minutely small (less than 0.5% of the portfolio each) stakes this quarter. TRCO was purchased at prices between $32 and $39, and reduced by ~90% this quarter at prices between $36.75 and $45. The stock currently trades at $46.43. The ADM position was established at prices between $45 and $51, and reduced by ~45% this quarter at prices between $39.50 and $52. It currently goes for ~$42. The KHC stake was established at prices between $55 and $65, and reduced by ~45% this quarter at prices between $42.50 and $58. It currently trades at $48.26.

Note: Last December, Nexstar Media (NXST) agreed to acquire Tribune for $46.50 per share cash.

Allot Communications (ALLT), Comerica (CMA), Intelsat SA (I) & Calls, Marvell Technology Group (MRVL), RingCentral Inc. (RNG), Salesforce.com (CRM), SPDR S&P 500 Calls, SPDR Energy (XLE) Calls, and Sprint (S): These very small (less than ~1% of the portfolio each) stakes saw reductions this quarter.

Note: Regulatory filings since the quarter ended show them owning 1.36M shares (~4% of the business) of Allot Communications. This is compared to 3.27M shares in the 13F report.

Kept Steady

Liberty Broadband: LBRDK is the largest individual stock position by far at ~13.5% 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 $89.37. There was marginal trimming in the last three quarters. For investors attempting to follow Soros, Liberty Broadband is a good option to consider for further research.

LPL Financial (LPLA): The very small 0.81% portfolio stake in LPLA was kept steady this quarter.

The spreadsheet below highlights Soros’s significantly large 13F positions as of Q4 2018:

George Soros - Soros Fund Management - Q4 2018 13F Report - Q/Q Comparison

Disclosure: I am/we are long BAC, PM. 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.