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George Soros Is Short Emerging Markets, Hurt By Gold in January

Eighty year old George Soros, the evil financier behind all sorts of conspiracies against Glenn Beck’s America, was born in Budapest. He moved to London in 1949 to study at the London School of Economics. After working for a few years after graduation, he moved to New York where one day he would play tennis with Bill Ackman. He opened his first long/short hedge fund, the Double Eagle Fund, in 1969 with $4 Million. In 1973 he changed the name of his fund to Soros Fund. He worked with Jim Rogers at the Soros Fund until 1980. By then the fund was renamed to ‘Quantum Fund’. Quantum Fund had a successful 1980, with triple digit returns, but the fund lost 23% in 1981. Following heavy losses, his investors asked for their money back and Soros decided to stop managing money for a few years.

setting up a hedge fund

He came back in 1984, and made a killing in currency markets in 1985. In the meantime he was keeping a diary, jotting down what he was thinking at the time he was making these bets. He later published these in his “must read” book, The Alchemy of Finance, in 1987.

George Soros returned an average of 30.5% per year between 1969 and 2000. In 2007, Soros came back from retirement after the quant liquidity crunch and managed to generate a 32% return for the year. George Soros even managed to return 8% in 2008, the worst year for most hedge funds. Soros returned 29% in 2009, earning $3.3 Billion in fees and investment gains.

During the fourth quarter last year, George Soros’ biggest move was shorting emerging markets. He opened a $360 Million short position using put options on iShares Emerging Markets ETF (EEM). He also shorted BHP Billiton (BHP) to the tune of $72 Million. He partially balanced these short positions by initiating a $150 Million long position on Petroleo Brasileiro (PBR). George Soros also initiated brand new positions in Best Buy (BBY), Coca-Cola Enterprises (CCE), and General Motors. William Ackman’s Pershing Square, David Tepper’s Appaloosa, Roberto Mignone’s Bridger Management,  Richard Perry’s Perry Capital, and Leon Cooperman’s Omega Advisors are among the other hedge fund managers with GM investments.

George Soros also increased some of his holdings significantly. He bet big on Delta Airlines (DAL) by increasing his holdings to $186 Million at the end of December. David Tepper is also very bullish about the airlines. Soros more than doubled his Dendreon (DNDN) position to $147 Million. He increased his Apple bet by 23%, joining Jim Simons, Dan Loeb, Andreas Halvorsen, Joseph DiMenna, Chase Coleman, Stephen Mandel, Barry Rosenstein, Craig Effron, and David Einhorn . Soros’ some of the other larger purchases during the fourth quarter were as follows:  Westport Innovations Inc (WPRT), Qualcomm (QCOM), Directv (DTV), Citigroup (C), Walmart (WMT), Lowes Companies (LOW), Comcast Corp (CMCSA), Ford (F), and JP Morgan (JPM).

George Soros’ new stock picks returned 0.4% since the end of December, underperforming the SPY by 5.5 percentage points. QCOM, AAPL, and JPM were the best performing stocks in this list. Since his top new purchases account for a small percentage of his overall holdings, it might be better to calculate the returns of his top 25 long stock holdings.

Company Ticker Return Value (Million)
SPDR GOLD TRUST GLD -4.6% 655
INTEROIL CORP IOC 2.3% 320
MONSANTO CO NEW MON 8.2% 229
DELTA AIR LINES INC DEL DAL -5.6% 186
NOVAGOLD RES INC NG 0.7% 184
PLAINS EXPL& PRODTN CO PXP 15.8% 152
DENDREON CORP DNDN 0.7% 147
PETROLEO BRASILEIRO SA PETROBR PBR -4.2% 132
TEVA PHARMACEUTICAL INDS LTD TEVA -1.7% 132
EMDEON INC EM 14.5% 105
APPLE INC AAPL 10.6% 98
WESTPORT INNOVATIONS INC WPRT -18.5% 84
KINROSS GOLD CORP KGC -13.3% 75
BEST BUY INC BBY -2.0% 72
ISHARES GOLD TRUST IAU -4.6% 70
COCA COLA ENTERPRISES INC NEW CCE 4.8% 59
LAWSON SOFTWARE INC NEW LWSN 8.4% 54
QUALCOMM INC QCOM 16.4% 53
DIRECTV DTV 8.9% 52
CITIGROUP INC C 3.2% 51
WAL MART STORES INC WMT 3.3% 51
LOWES COS INC LOW 0.5% 50
MOSAIC CO MOS 15.7% 50
EXAR CORP EXAR -8.2% 45
COMCAST CORP NEW CMCSA 9.7% 44

The weighted average return for these positions is 1% since the end of December, vs. SPY’s 5.9%. Gold was the biggest position in Soros’ portfolio, contributing to the subpar performance. He had $655 Million of GLD, $184 Million of Novagold (NG), $75 Million of Kinross Gold (KGC), and $70 Million of iShares Gold Trust (IAU), totaling nearly $1 Billion. His oil bets, Petrobras and InterOil, also hurt his performance so far in 2011.

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