Soros Fund Management LLC is a privately owned investment company based in America. It was brought into existence by George Soros in the year 1970. The company is headquartered in New York.
It was started as a hedge fund and is presently structured as a family office.
The team of the company consists of knowledgeable and experienced professionals from the industry. The staff of the company works mutually and tries to generate maximum returns, using their skill sets.
George shifted to England in 1947. From there, he completed his graduation (B.S.) and masters (M.S.) in philosophy in 1951 and 1954 respectively, from the London School of Economics.
He worked as a seller of fancy items at the seaside, shops, etc, but soon realized that this is not his liking. So he tried and managed to get a job at a merchant bank in London. He started his career in the financial sector with Singer & Friedlander in 1954 as a clerk. However, later he got shifted to the arbitrage department. And the journey continued. In 1956 he moved to New York City and joined a brokerage house F.M. Mayer as arbitrage trader, specializing in European stocks and gained popularity among institutional investors of US.
In 1959, George moved to Wertheim & Co., and worked as an analyst (European Securities), till 1963. He developed “Reflexivity Theory” during this period. In 1963, he shifted to Arnhold and S. Bleichroeder and worked as a Vice President. He started Double Eagle Hedge Fund with an investment of $4 million, under the umbrella of Arnhold and S. Bleichroeder.
In 1970 he founded Soros Fund Management. In 1973, he took a back step from Double Eagle fund (later renamed as Quantum Fund) and fully concentrated on Soros Fund.
Having being worked with good players of the industry for many years at different positions, and he got flair of investment activities and became aware of how things work. This has helped George in becoming successful at Soros Fund Management.
Investment Portfolio – Type and Fund Profile
The investments of the company are neither restricted to a particular geographic location nor to a particular class of assets.
Investments are being made across the world in public equity and fixed income markets. Also, private equity and venture capital funds are managed by the firm. The amount is being invested in start-ups, buyouts, build-ups and growth equity transactions. Also, investments are being made in foreign exchange, currency and commodity markets.
The firm has investments in multiple sectors, thereby making the portfolio a well-diversified one. It keeps upgrading the portfolio as per the trend and performance of sector and companies, so as to produce great results.
The portfolio of the company is valued at $3,300,433,000. According to the recent 13F filed with SEC on 12/31/2018, the top five holdings of the fund are:
09/30/2018 to 12/31/2018
($ in 1000’s)
|LIBERTY BROADBAND CORP||7,290,838||UNCH||$525,159|
|VICI PPTYS INC||20,898,926||–600,000||$392,482|
|CAESARS ENTMT CORP||$263,369|
As per the recent report filed (2018 – Q4), the topmost holding having a maximum proportion of the fund’s portfolio is Liberty Broadband Corp (15.91%).
As per the recent filing (Q4 2018), the company has made various changes to its portfolio that includes increasing or decreasing the stake in existing holdings of the portfolio, taking new positions and completely selling off some of the holdings of the portfolio.
During Q4, Soros Fund Management has acquired 46 holdings, the major acquisitions among which are Invesco Qqq TrPUTPUT (purchased 342,900 shares worth $52896), Sector Spdr Trust (purchased 2,025,759 worth $48254). The contribution of these holdings to the portfolio is 1.6% and 1.45% respectively. The company dumped 70 holdings of the portfolio that include Alibaba Group Holding Limited, Apple Inc., Microsoft Corp, and Netflix Inc.
The company increased its stake in 23 of its existing holdings; the major ones among these are T-Mobile Us Inc. and Viper Energy Partners Lp wherein the company increased its stake by 833% and 287% respectively.
The company has reduced its stake in 82 holdings and the major ones are Tribune Media Co and Marvell Technology Group Ltd wherein the stake has been brought down by 91% and 86% respectively.
Soros Fund Management makes investments for the short term rather than long term. The fund manager of the company is known for short term speculative moves. Investments are made worldwide and the company does not hesitate in taking U-turn in the market when required.
The company focused on macro strategy for investment and this was very successful as well. Through this strategy, the founder of the company George Soros became a billionaire. Also, this strategy inspired traders to take moves in currency, bond and commodity markets to generate profits.
However, as per the reports, Dawn Fitzpatrick, the new Chief Investment Officer of the company (joined in early 2017) has reduced the use of this strategy over last year, owing to lesser opportunities found with the strategy. The fund has decreased most of its macro options thereby moving away from the strategy. As per the sources, Dawn has taken out money from external macro managers and allocations to the internal team of the company have been brought down.
The company is known for making bold moves.
Returns and Investor Letter
The company reduced its position in the technology sector as this sector got a hit at the time of market sell-off, last year. Also, it reduced its stake in stocks related to the entertainment industry.
The fund has diverted its money into passive investment.
Soros Fund Management has an excellent track record. From 1969 to 2000, the company generated an average return of 30.5%/year. Soros returned from retirement in 2007 post quant liquidity trouble, after understanding that the company might face difficulty. He managed to generate a 32% return at that time. In 2008, when the stock markets crashed and most of the investment companies faced a hard time, George could generate an 8% return. The journey continued and in 2009, the returns of the company came out to be 29%. The trend continued with little ups and downs, which are a part of the game.
Though 2018 was a tough year for most of the hedge funds, and rankings for many companies changed, Soros Fund has managed to back it up with excellent performance history. It maintained its second place with a net gain of $43.9 billion, since the beginning.
As per the reports, Soros Capital Management was the most profitable company across the hedge fund industry, with an average annual return of 20% over four decades.