Tracking George Soros’s Portfolio – Q3 2020 Update

Summary

Soros’s 13F portfolio value decreased from $4.48B to $4.08B this quarter. The number of positions decreased from 141 to 132.

Soros added Palantir Technologies and Unity Software, while reducing T-Mobile US. Also, most of their recent additions in Financials were either reduced or eliminated during the quarter.

Liberty Broadband, at ~19% of the portfolio, is by far the largest 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 11/13/2020. Please visit our Tracking Soros Fund Management Holdings article for an idea of his investment philosophy and our previous update for the fund’s moves during Q2 2020.

Soros Fund Management invests globally, and the long positions in the US market reported in the 13F filings represent ~20% of the overall portfolio. The 13F portfolio value decreased ~10% this quarter, from $4.48B to $4.08B. The number of positions decreased from 141 to 132. Very small stock positions and large debt holdings together account for ~20% 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. The focus of this article is on the larger equity positions. The top three individual stocks held are Liberty Broadband (LBRDK), D.R. Horton (DHI), and Palantir Technologies (PLTR). To learn about Soros’s distinct trading style and philosophy, check out his “The Alchemy of Finance” and other works.

Note: In an interview in August, Soros tersely explained his trading philosophy and market edge as taking advantage of the following: a) fallibility – in situations that have thinking participants, the participants’ view of the world is always incomplete and distorted, and b) reflexivity – the distorted views can influence the situation to which they relate, and it leads to inappropriate actions. He also believes the edge is now gone, as the information was made public in his book.

New stakes

Invesco QQQ Trust (QQQ), Industrial Select Sector SPDR ETF (XLI), and SPDR S&P 500 Trust ETF (SPY) Puts: QQQ is a large 7.67% of the portfolio stake established this quarter at prices between $250 and $303, and it currently trades at ~$290. The small 0.78% XLI position was purchased at prices between $67 and $80, and it is now at ~$86. SPY is a 1.23% of the portfolio short stake through Puts purchased, as the underlying traded between ~$310 and ~$358. It is now at ~$358.

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

Palantir Technologies: PLTR had a direct listing on September 30th. Trading started at ~$10, and it currently goes for $15.80. The stake is Soros’s third-largest individual stock position at 4.29% of the portfolio.

Immunomedics (IMMU), Microchip Technology (MCHP), PG&E Corp. (PCG) Puts, Unity Software (U), and Varian Medical Systems (VAR): These are small (less than ~1% of the portfolio each) positions established this quarter. Gilead (GILD) is acquiring Immunomedics for $88 per share cash. Unity Software had an IPO in September. Shares started trading at ~$90 and currently go for ~$115. Varian Medical is getting acquired by Siemens Healthineers AG (OTC:SEMHF) for $177.50 per share cash.

Stake Disposals

iShares Russell 2000 ETF (IWM) Puts: The huge ~11% short position through puts established last quarter was disposed this quarter. IWM traded between ~$105 and ~$153 last quarter and between ~$139 and ~$159 this quarter.

TransDigm Group (TDG): TDG was a 1.71% stake purchased in Q1 2020 at prices between $246 and $658, and the stock currently trades at ~$567. The disposal this quarter was at prices between ~$411 and ~$519.

Grifols S A (GRFS): The 1.10% portfolio stake in GRFS was acquired in Q1 2019 at prices between $17.50 and $21, and the stock currently trades at $19.04. The last two quarters had seen a ~30% stake increase at prices between $16.25 and $25.75. The disposal this quarter was at prices between $15.40 and $20.25.

Legg Mason (LM): LM was a 0.57% merger-arbitrage stake. It got acquired by Franklin Resources (BEN) for $50 per share (all-cash) in a deal that closed in July.

Bank of New York Mellon (BK), Bank of America (BAC), Goldman Sachs (GS), JPMorgan Chase (JPM), PNC Financial (PNC), and US Bancorp (USB): These small (less than ~0.75% of the portfolio each) positions in the financial sector were eliminated this quarter.

Stake Increases

D.R. Horton: The 5.66% DHI stake was established in Q1 2019 at prices between $35 and $47, and increased by ~70% next quarter at prices between $42 and $47. Q3 2019 saw an ~18% selling at prices between $43.50 and $53, while next quarter, there was a ~75% stake increase at prices between $29 and $62. Last quarter saw a ~25% selling at prices between $32 and $59. The stock currently trades at ~$73. There was a ~70% stake increase this quarter at prices between ~$54 and ~$78.

Darden Restaurants (DRI): DRI is a 2.51% portfolio stake established last quarter at prices between $44 and $86, and it currently goes for $108. This quarter saw a ~15% stake increase at prices between ~$71 and ~$105.

Activision Blizzard (ATVI): ATVI is a 2.18% of the portfolio stake established in Q4 2019 at prices between $52 and $59, and increased by ~45% next quarter at prices between $52 and $64. The stock currently trades well above those ranges at $77.55. The last two quarters have seen only minor adjustments.

Aramark Inc. (ARMK), E*TRADE Financial (ETFC), PennyMac Financial Services (PFSI), and Tiffany & Co. (TIF) Puts: These small stakes were increased this quarter. E*TRADE was a merger-arbitrage stake.

Stake Decreases

iShares Trust iBoxx ETF (LQD), Utilities Select Sector SPDR ETF (XLU) Calls, and T-Mobile US (TMUS): These three positions were decreased this quarter. The 4.42% LQD stake was purchased in Q1 2020 at prices between $105 and $134, and increased by ~600% last quarter at prices between $121 and $135. The stock currently trades at ~$136. This quarter saw marginal trimming. XLU Calls were established in Q1 2020 as the underlying traded between $45 and $71, and increased by ~340% last quarter as it traded between $52 and $63. This quarter saw the large 4.41% of the portfolio stake reduced by ~85%, as XLU traded between ~$56 and ~$62. It is now at $66.09. The 1.59% TMUS position was primarily built last quarter at prices between $82 and $110, and it is now at ~$128. There was a ~60% selling this quarter at prices between ~$104 and ~$119.

VICI Properties (VICI): In October 2017, Caesars Entertainment combined with Caesars Acquisition in a merger (bankruptcy court reorg). The bankruptcy reorg included the spin-off of VICI Properties whereby the creditors received VICI shares. The 3.14% of the portfolio position 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 $25.81. Q2 2019 saw a ~5% stake increase, while last quarter saw a ~10% reduction. There was a ~62% selling in Q4 2019 at prices between $22.50 and $25.50, and that was followed with a ~30% further reduction next quarter at prices between $11.20 and $28.15. Last quarter saw a ~25% stake increase at prices between $13.75 and $23, while this quarter, there was an ~11% trimming.

DraftKings Inc. (DKNG), Otis Worldwide (OTIS), and PG&E Corp.: These three positions were established last quarter. DKNG is a 3.40% position established at prices between $11.75 and $43.70, and it is now at $42.84. DKNG was a favorite among Robinhood traders last quarter, and it is likely that Soros took advantage of the resultant uptrend. This quarter saw a ~5% trimming. The 1.23% OTIS sake was purchased last quarter at prices between $44 and $61, and it is now at $65.57. This quarter saw a one-third selling at prices between ~$56 and ~$65. A 2.33% PCG stake was purchased last quarter at prices between $7.90 and $12.60 and almost sold out this quarter at prices between $8.60 and $10. A small offsetting short position through Puts was also established during the quarter. The stock currently trades at $11.40.

NortonLifeLock (NLOK) (previously Symantec): NLOK is a 1.18% portfolio stake established in Q2 2019 at prices between $18 and $24.50. Next quarter saw a ~5% stake increase and that was followed with a ~70% stake increase in Q4 2019 at prices between $22.50 and $26.50. The stock currently trades at $19.80. There was a ~18% selling in Q1 2020 at prices between $16.50 and $28.50. Last quarter saw a ~80% stake increase at prices between $18 and $23 while this quarter there was a ~50% selling at prices between $20 and $24.

Note: A $12 per share special dividend was distributed in January – their enterprise security business was sold to Broadcom (AVGO), and the company had promised to return the entire after-tax proceeds to shareholders.

Caesars Entertainment (CZR): Soros had huge stakes (both equity and debt) in Caesars Entertainment and Caesars Acquisition. In October 2017, they combined in a bankruptcy court reorg. The terms called for Caesars Acquisition shareholders to receive 1.625 shares of CZR for each share held. The transaction resulted in Soros’s position in CZR increasing from ~3M shares to 34.5M shares – his debt holdings also got converted in the reorg. Q1 to Q3 2019 had seen the position sold down by ~60% at prices between $6.75 and $12.25. Next quarter saw the stake almost sold out at prices between $11.50 and $13.75. In June, Eldorado Resorts (ERI) agreed to buy the company in a cash-and-stock deal ($8.40 cash and 0.0899 ERI shares for each share of CZR held) engineered by Carl Icahn. The combined company took the Caesars Entertainment name and ticker after the deal closed in July. Soros’s position saw a ~220% stake increase during the quarter. The position was almost sold out this quarter at prices between ~$30 and ~$59.

Alphabet Inc. (GOOG): GOOG is a small 0.63% of the portfolio position purchased in Q2 2019 at prices between $1036 and $1288, and reduced by ~50% in Q1 2020 at prices between $1057 and $1527. This quarter saw another similar selling at prices between $1415 and $1728. The stock is now at ~$1777.

Note: Alphabet is a frequently traded stock in Soros’s portfolio.

Peloton Interactive (PTON): PTON had an IPO last October. Shares started trading at ~$25 and currently go for ~$101. Q4 2019 saw an ~80% selling at prices between $21 and $37, while next quarter there was a ~10x stake increase to a top-five ~4% portfolio stake at prices between ~$20 and ~$35. Last quarter saw selling: an ~85% reduction to a small 0.66% portfolio stake at prices between $26.50 and $60. This quarter saw the remainder stake almost eliminated at prices between ~$58 and ~$101.

iShares Short-Term Corporate Bond ETF (IGSB): IGSB is now a 1.50% of the portfolio stake. It was purchased last quarter at prices between $52 and $55. This quarter saw the stake sold down by ~60% at ~$55. IGSB currently trades at $54.93

LPL Financial Holdings (LPLA): The bulk of the 0.60% of the portfolio stake in LPLA was purchased in Q2 2018 at prices between $57 and $71, and the stock currently trades at $89.54. There had only been minor adjustments since. This quarter saw a one-third selling at prices between ~$74 and ~$85.

Citigroup Inc. (C), Morgan Stanley (MS), and Sea Ltd. (SE): These very small (less than ~0.75% of the portfolio each) positions established last quarter were substantially reduced this quarter.

Kept Steady

Liberty Broadband: LBRDK is the largest individual stock position by far at ~19% of the portfolio. The stake was established in Q2 2016 at prices between $55 and $60.50. The stock has doubled and is currently trading at ~$153. Q4 2019 saw a ~20% reduction at prices between $103 and $125. That was followed with a ~7% trimming in Q1 2020.

SelectQuote (SLQT) and Hain Celestial Group (HAIN): These are fairly large new positions established last quarter. SelectQuote had an IPO in May. Shares started trading at ~$27.50 and currently go for $19.70. Soros’s stake is at 2.75% of the portfolio. The 3.69% HAIN position was purchased at prices between $25 and $32, and the stock currently trades above that range at $36.47.

Alcon Inc. (ALC): The ~1% ALC position was purchased in Q3 2019 at prices between $56 and $62.50. There was a ~20% selling in Q4 2019 at prices between $55 and $59, while next quarter saw a roughly two-thirds increase at prices between $40 and $64. It is now at $65.41.

iShares National Muni Bond ETF (MUB): The 0.69% MUB position was established in Q1 2020 at prices between $102 and $118, and it now goes for ~$116.

SPDR Portfolio Short Term Corporate Bond ETF (SPSB), AGNC Investment Corp. (AGNC), and TD Ameritrade (AMTD): These small stakes were kept steady this quarter. TD Ameritrade was a merger-arbitrage stake.

The spreadsheet below highlights Soros’s significantly large 13F positions as of Q3 2020:

Via https://seekingalpha.com/article/4389180-tracking-george-soross-portfolio-q3-2020-update