George Soros, the 85-year-old billionaire who smashed the Bank of England in 1992, is becoming more engaged in day-to-day trading at his family office, taking a series of large, bearish wagers.
Soros is best regarded for netting $1 billion as a hedge fund manager decades ago when he and his then-chief strategist Stan Druckenmiller gambled that the U.K. would be forced to devalue the pound. His predictions have not always played out so well.
Expecting weakness in various global markets, his Soros Fund Management cut its publicly disclosed U.S. stock holdings by 37 % in the first quarter while purchasing shares of gold miners and an exchange-traded fund tracking the price of the precious metal.
Since then, the S&P 500 Index has returned 3.1 percent. Barrick Gold Corp., his biggest new position disclosed in the quarter, fared better, jumping 44 %.
Here’s a glance at some recent calls by Soros, whose personal fortune is estimated at $24.7 billion, and some of the other trades made by his family office in the past few years:
Soros has been troubled about China since at least 2013, conveying escalating worry that the country’s leaders may not have the ability to manage an economic slowdown.
Earlier this year, he likened China’s economy to the U.S. in 2007-08, pointing to debt-fueled growth that’s produced uncertainty and instability in the country’s banking system.
“Most of the money that banks are supplying is needed to keep bad debts and loss-making enterprises alive,” Soros stated on April 20 at an Asia Society function in New York.
More defaults might be looming in the nation’s corporate bond market. Bloomberg Intelligence estimated in May that 15.6 trillion yuan ($2.4 trillion) of corporate borrowing can be classified as “at risk loans” – those where the borrower does not have sufficient earnings to insure interest payments. That is equal to 23 % of the country’s gross domestic product in 2015.
China’s Hang Seng Index has returned 10 % over the past 3 years, not superb, but nothing like the 37 % slump in U.S. stocks in 2008. The index is down 22 % from a post-financial crisis peak in April 2015, when including dividends.
At a panel discussion on Sept. 24, 2011, Soros stated the Greece-born European debt crunch was “more serious than the crisis of 2008.” Last year, he stated the chances of Greece departing the euro area were 50-50.
“You can keep on pushing it back indefinitely” by making interest payments without writing down debt, Soros stated in a Bloomberg Television interview that broadcasted March 24, 2015. “But in the meantime there will be no primary surplus because Greece is going down the drain.”
There are indications that nervousness about the euro area economy is ebbing as investors more and more focus on China. Greece and its creditors in the currency bloc might be nearing an agreement to disburse a new tranche of bailout aid that would permit it to meet debt payments this summer and also pave the way for reestablishing entry to the European Central Bank’s regular refinancing operations.
Given that Soros’ 2011 comments, the Bloomberg European 500 Index has returned 82 %. European sovereign debt has returned about 14 % in dollar terms.
Soros took a personal awareness in Argentina – where he’s been invested for quite a few years – and most recently gambled successfully on the country’s defaulted bonds. From time to time, he’d meet privately with former President Cristina Fernandez de Kirchner to talk about Argentina’s economic potentials. After a U.S. court impeded payments on the nation’s bonds, his Quantum Partners fund in 2014 joined an investor group that sued bond trustee Bank of New York Mellon Corp. in London for failing to disperse interest payments on securities, claiming the ruling should not apply to notes governed by laws outside of the U.S.
While the argument was resolved after Fernandez left office last year, Soros has still been exhibiting interest in the country. Representatives for his fund took part in Argentina’s bond roadshow in April, based on a document obtained by Bloomberg, after which the government sold a record $16.5 billion in securities in its return to the global debt market.
Argentine bonds have returned 57 % on average since Soros’ wager was exposed with the lawsuit in August 2014.
Soros’ family office made almost $1 billion from November 2012 to February 2013 gambling that the Japanese yen would crash with the election of Prime Minster Shinzo Abe, who shoved the Bank of Japan to launch additional stimulus measures. A couple of months later, the billionaire cautioned that moves to expand monetary easing could bring about “an avalanche” in the yen as people shift their money abroad.
“What Japan is doing is actually quite dangerous because they’re doing it after 25 years of just simply accumulating deficits and not getting the economy going,” Soros stated in an April 5, 2013, interview with CNBC. Central bank officials may not be able to stop the currency’s fall, he stated.
The yen went on to fall in the wake of Soros’ comments.
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