According to the mining investment news site Mineweb, billionaire investor and philanthropist George Soros was significantly active in the mining sector last quarter. Mineweb’s Dorothy Kosich wrote earlier today:

Über investor George Soros stocked up on potash mining shares during the second quarter, increased his Freeport-McMoRan Copper & Gold holdings by more than 1,600%, invested in the world’s largest uranium miner, Cameco, and dumped his holdings in Apex Silver, CVRD and Southern Copper.

Documents filed with the SEC revealed that among the gold companies in which Soros Fund Management maintained its holdings during the second quarter were AngloGold Ashanti, Barrick, and Newmont.

Soros Fund increased its holdings in Potash Corp. of Saskatchewan Inc. by 2568%… The fund also enhanced its Freeport-McMoRan Copper & Gold holdings by 1608%…

Among the fund’s new purchases was Canadian uranium miner Cameco… as well as CONSOL Energy Inc., the largest U.S. producer of high-Btu bituminous coal… The fund also initiated holdings in Intrepid Potash, the largest U.S. potash producer…

The Soros Fund reduced to its holdings in IAMGOLD Corp. by 23.3%… Soros reduced to his holdings in Alpha Natural Resources Inc., a Central Appalachian coal producer, by 46.95%…

Meanwhile, the fund sold out its holdings in the world’s largest iron miner, Brazil’s Vale (previously CVRD), as well as its holdings in U.S. silver producer Apex Silver Mines, and also in Southern Copper Corp.

Source:

“Soros increases potash and FCX holdings, drops Apex Silver, CVRD, Southern Copper”
Dorothy Kosich
Mineweb, August 19, 2008

MarketWatch’s Sam Mamundi wrote this morning:

The investment vehicle of legendary investor Warren Buffett increased its stake in transport outfit Union Pacific Corp. by almost double in the second quarter.

Berkshire Hathaway also added stakes in Bank of America Corp. (BAC), Lowe’s Cos. (LOW), and NRG Energy Inc. (NRG), according to filings released this morning.

Berkshire Hathaway (BRK.A) grew its Union Pacific (UNP ) stake from 4.453 million shares at the end of the first quarter to 8.906 million at the end of the second quarter. Union Pacific stock is up 23.6% this year…

Berkshire addition of NRG Energy Inc (NRG ) totaled 3.24 million shares in the second quarter, worth $139 million. While NRG’s stock is down 18.7% this year, the energy sector is considered a good investment by money managers right now.

The two sell-offs in Berkshire’s portfolio in the recent quarter were both related to acquisition deals. Trane Inc. was sold off in an acquisition by Ingersoll-Rand Company Ltd (IR). Similarly, Berkshire eased its stake in Anheuser Busch Cos. from more than 35 million shares to less than 14 million shares in the wake of Anheuser’s merger with InBev which had yet to be consummated as of the second quarter.

MarketWatch’s Greg Morcroft also reported this morning:

Shares of Lehman Bros. Holdings Inc. rose more than 6% at one point Friday as news that famed investor George Soros’ hedge fund boosted its stake in the company brought out buyers.

An analyst report from David Trone at Fox-Pitt Kelton also lent support to the shares. He said that Lehman’s upcoming losses should be smaller than the second quarter’s as hedges in place at the firm appear to be working.

Soros Fund Management has raised its stake in Lehman Brothers (LEH) to 9.47 million common shares at the end of June 30, up from 10,000 shares at the end of March 31.

The fair market value of the stake is estimated at $187.7 million, according to a regulatory filing by the fund Thursday.

Reuters’ Karen Wutkowski noted yesterday:

Billionaire investor Eddie Lampert cut his stake in Home Depot Inc (HD.N) by 13 percent to 19.7 million shares as of June 30, according to a disclosure document for his fund RBS Partners.

The fund also increased its stake in AutoZone Inc (AZO.N) to 22.9 million shares from 22 million shares the prior quarter, according to a filing with the U.S. Securities and Exchange Commission. It cut its stake in KB Home (KBH.N) to 358,000 shares from 605,000 shares.

Sources:

“Buffett’s Berkshire doubles Union Pacific stake”
Sam Mamudi
MarketWatch, August 15, 2008

“Soros buy puts shine on Lehman shares”
Greg Morcroft
MarketWatch, August 15, 2008

“Lampert cuts Home Depot stake, ups AutoZone holdings”
Karey Wutkowski
Reuters, August 14, 2008

According to the business news website Globes [online], George Soros recently bought shares in an Israeli technology company. Dan Shohet and Shiri Habib-Valdhorn wrote yesterday:

Network application solutions company Radware (Nasdaq: RDWR; TASE: RDWR) has disclosed a new party at interest, despite the dramatic plunge in its share price in recent months. The company notified the US Securities and Exchange Commission (SEC) last night that Soros Fund Management, owned by US financier George Soros, had become a party at interest in the company with a 5.6% holding.

Soros is investing in Radware after its share fell 45.4% since the beginning of the year, with the company posting steeper than expected losses and revenue way below the analysts’ estimates in both the first and second quarters. The company currently has $148.6 million in cash, or $7.50 per share, compared with yesterday’s closing price on Nasdaq of $8.40. Radware does not expect to return to operating profitability until the fourth quarter of the year, but with a share price that is almost the same as its cash per share rate, there are those who consider it a buying opportunity, or at least a defensive stock with little chance of falling further.

Source:

“George Soros builds stake in Israeli technology firm”
Dan Shohet, Shiri Habib-Valdhorn
Globes [online] (Israel), August 13, 2008

It appears that billionaire investor George Soros believes the price of crude oil will be heading south, while gold goes up. From “The Croesus Chronicles” on the Forbes website yesterday:

Soros finally shorted oil at $137 a barrel and put on a long position in gold; he expects to see gold hold its ground even if oil continues to decline. In fact, the gold bug clique believes in a consistent 10-to-1 ratio for gold and oil. It holds that either gold will rise to 10 times a barrel of oil ($1,350 an ounce) or oil will fall to $96 a barrel–one-tenth the present market price of gold. Croesus was told Tuesday that statistics spanning many decades support, on average, this 10-to-1 ratio.

Source:

“Gold And Oil For Soros; Illiquidity At Merrill”
Forbes, July 17, 2008

Billionaire investor George Soros spoke to Reuters recently in a phone interview and painted a grim picture when it comes to the outlook for mortgage giants Fannie Mae and Freddie Mac, the dollar, and the larger U.S. economy. Reuters’ Jennifer Ablan wrote this morning:

“This incident (with Fannie and Freddie) is not the last one,” Soros told Reuters in a phone interview, adding the year-long global financial market turmoil represented “the most serious financial crisis of our lifetime.”

“Freddie Mac and Fannie Mae have a solvency crisis not a liquidity crisis,” said Soros. “There’s no problem in their borrowing. And in fact, insofar there is a problem, the Fed is there to provide the liquidity.”

That said, both Fannie and Freddie are “extremely leveraged,” he said. “The deterioration in the housing market, the foreclosures are going to cause losses which exceed their equity,” said Soros, whose famous bet against the British pound earned his Quantum Fund $1 billion in 1992.

The former partner of Jim Rogers added that problems with the greenback would continue as well. Soros told Reuters:

I think the dollar is vulnerable because the economy is going into a recession and the actions of the authorities do involve the accumulation of debt. There is various ratios by which the creditworthiness of a country’s assurances are deteriorating.

The ongoing credit crisis is taking a toll on the larger U.S. economy. The Hungarian-born investor said:

It is an idle dream to think that you could have this kind of crisis without the real economy being affected.

Soros believes the options available to Ben Bernanke and the Federal Reserve are extremely limited. From the Reuters piece:

All told, Soros said Ben Bernanke, chairman of the Federal Reserve, is in a bind.

“When he recognized the seriousness of the credit crisis, he acted very radically lowering interest rates and he used the tools that are at his disposal,” Soros said.

However, now the “armory” is depleted, he said adding that Bernanke can’t lower interest rates because of the effect it would have on the dollar and he can’t raise interest rates because of the looming recession.

“Therefore, his options are limited — he is boxed in,” Soros said.

Source:

“Soros says Fannie, Freddie crisis not the last”
Jennifer Ablan
Reuters, July 15, 2008

Looks like legendary investor George Soros went on a shopping spree in the Indian stock market recently. According to The Economic Times (India) website:

Billionaire global investor George Soros has turned contrarian on the Indian stock market, which has seen stocks being beaten down over the past few weeks. His hedge fund Quantum, which was reported to have posted earnings of over 30% last year, went on a buying spree at a time, when most funds were dumping stocks in a sliding market.

On July 4, Quantum Fund bought a 3.8% equity in Jain Irrigation Systems, and close to 1% of the holding of Jai Corp for a value consideration of Rs 167 crore. Since February, the fund has made investments valued at close to Rs 600 crore, or $ 140 million, in various companies, including Indiabulls Financial Services, Indiabulls Real Estate and Kalindee Rail Nirman.

Bombay Stock Exchange
Mumbai, India

The Times’ Vijay Gurav discussed the Fund’s latest acquisitions in detail. Gurav wrote:

Among his latest acquisitions in India, Mr Soros bought a fresh stake of 3.8% in Jain Irrigation for Rs 121 crore. The stocks were bought at Rs 442.9 per share against the current market price of Rs 483…

Mr Soros also picked up a small stake of 0.9% in Jai Corp at Rs 282 against Friday’s closing of Rs 372. The scrip, in fact, has vaulted 27% in one week, outperforming the market by a wide margin…

Two Indiabulls group companies — Indiabulls Financial Services and Indiabulls Real Estate — are notable examples of Quantum’s recent acquisitions. The fund held 2.2% and 3.6%, respectively, in the two companies as of March 31, 2008. It also owns a 7.1% stake in Kalindee Rail Nirman, of which 6.8% was bought for Rs 32 crore in February.

Source:

“George Soros’ hedge fund Quantum on buying spree”
Vijay Gurav
The Economic Times (India), July 14, 2008

Earlier today, the online edition of Germany’s Stern magazine posted the transcript of an interview with billionaire investor George Soros. Here are some excerpts from his conversation with Stern’s Katja Gloger:

STERN: Isn’t a crash of such magnitude imminent?
SOROS: We are in the midst of the worst financial crisis in 30 years. We have recently seen how bubbles burst. Take, for example, the high tech bubble or the current mortgage crisis. And we have not yet seen the end of this one. The decline goes further than people expect. I believe, that we have not even seen half of the price deterioration. Over the next year, more than 2 million households will become insolvent because they will not be able to pay back their loans. There is a huge destruction of wealth underway.

STERN: You even talk about a “super bubble”…
SOROS: …Yes. It started to form in 1980, when the ideology of market fundamentalism gained a foothold. According to which, markets should regulate themselves, government interventions should be denied and restrictions should be lifted. Everything was based on self-regulating markets, which by the way was not an American invention. It started with Margaret Thatcher in the UK and was further promoted and pushed here in the US by then President Ronald Reagan. He even talked about the “magic of the market”. He, of all people, who is nowadays glorified almost like a saint. Yet, these highly praised markets have time and again been prone to excessive buying and selling which is almost impossible to control. US interest rates were so low that banks encouraged people to borrow more and more money. That is shocking, irresponsible. However, until now there was reason to hope that the government would intervene when things got really bad.

STERN: Just like a couple of months ago, when the US investment bank Bear Stearns basically collapsed and the Fed pumped billions of dollars into the system to avert further disasters.
SOROS: Yes, this is how you get bailed out, how buy your way out of the crisis. Though at some point, the alleged boom ends in a crisis. And this is exactly what we are currently seeing, the end of a super boom, the failure of a false ideology. We are witnessing the end of the “feel good society”, the end of an era.

STERN: How sick is the US economy really?
SOROS: I think that a recession is unavoidable. For years, the US has virtually absorbed the world economy’s money resources - since the dollar was the world’s reserve currency. We borrowed money from everybody, consumed more than we produced and are highly in debt. Yet nowadays, the dollar becomes less and less important as a reserve currency. Prices are rising. The mortgage and credit crises are like the sword of Damocles hanging above our heads. We have little wiggle room left. And Europe too, is going about the problem the wrong way. Inflation fear led the ECB to raise interest rates. That is not a smart thing to do. Although the recession emanates from the US, the Europeans are about to import the recession.

Next Stop, Europe?
Photo by Christoph Burgdorfer, stock.xchng

Source:

“We are in the midst of the worst financial crisis in 30 years”
Katja Gloger
Stern (Germany), July 3, 2008

Recently, Macleans (Canada) got the chance to speak to billionaire hedge fund manager George Soros about his new book, The New Paradigm for Financial Markets: The Credit Crisis of 2008 and What It Means. Here are some notable excerpts from the conversation:

MACLEANS: You’ve come to some grim conclusions about the market in the book. For example, you write that the bottom of the housing market is still “further than people think.”
SOROS: Behind the housing bubble, there’s a super bubble which has been growing for the last 25 years. Every bubble has an element of reality and an element of fantasy, of misinterpretation. The reality has been a trend of ever-increasing use of credit, of credit expansion. The misconception is that markets tend toward equilibrium and can be left to their own devices, to take care of their excesses. In the boom phase, it’s very pleasant because you enjoy credit creation and, with that, comes wealth creation. In the bust phase, it’s very unpleasant because you have credit contraction, a reduction of leverage, a decline in the value of collateral, etc. and that involves wealth destruction. I’m afraid that I am a prophet of doom. I don’t like it and I don’t think I’m predicting anything unconditional because I think that how the situation will evolve depends on how the authorities respond to it. But, unfortunately, we are in that phase of the super bubble.

Later on in the interview, the co-founder of the Quantum Fund with Jim Rogers shed some light on where he thought we were in the financial crisis:

MACLEANS: According to your book, “We are in the midst of a financial crisis the likes of which we haven’t seen since the Great Depression” and that “the entire financial system is on the brink of a breakdown.” Can you give me an idea of what that’s going to feel like?
SOROS: I actually think the acute phase is behind us. We had a pretty serious breakdown. The very core of the system was malfunctioning, and it’s still sputtering pretty badly. But the full effect of the damage is yet to be felt, both for the financial institutions and for the real economy. As far as the financial institutions are concerned, they’ve recognized a lot of losses. But they perhaps haven’t fully recognized all the losses they may incur from holding mortgages if the decline in housing prices hasn’t run its course, which I believe is the case. We are probably halfway in the decline and that decline is going to be quite steep—steeper than currently anticipated because housing prices are going to overshoot on the downside as they overshot on the upside. How far they overshoot depends on how the authorities react to the problem, because what causes the overshoot is foreclosures. It unbalances the supply. In my estimation, there could be something like two million foreclosures in the foreseeable future, half of it from subprime sector and half of it from option adjustable rate mortgages. So you need to take steps to try to reduce the number of defaults and the number of foreclosures. It’s possible to do something about it.
MACLEANS: There’s very little discussion about widespread reform of the credit sector. Instead, the authorities seem more inclined to argue about whether or not there’s a recession looming. Is the recession argument a red herring? Is it diverting attention from a more fundamental crisis?
SOROS: No, it’s not a red herring. For the moment, the economy is actually showing considerable resilience and people think the worst is over. I’m afraid that that is not the case; we are heading for a recession, but we are not there yet.

Source:

“The Macleans.ca Interview: George Soros”
Philippe Gohier
Macleans (Canada), June 13, 2008

Yesterday, Reuters reported that Grand China Air, which is part-owned by billionaire investor George Soros, has agreed to form an airline in partnership with the Yunnan provincial government in China, according to a company executive. Reuters’ Fang Yan wrote:

Grand China Air, the largest shareholder of Hainan Airlines Co, will hold a controlling stake in the new carrier, the executive said, without providing financial details.

The new company, which is pending regulatory approval, will initially be limited to flights within the province but will apply for long-haul domestic and international routes in the future, he said.

The new carrier would be in direct competition with the Yunnan unit of China Eastern Airlines Corp, which controls more than 50 percent of the highly profitable market for flights in Yunnan, a popular tourist destination with striking mountain and river vistas.

Yunnan, China
Photo by Erica Law, stock.xchng

Source:

“Grand China Air, Yunnan govt to set up new airline”
Fang Yan
Reuters, June 10, 2008

This morning, legendary investor George Soros appeared before the U.S. Senate Committee on Commerce, Science & Transportation, which held a hearing to examine energy market manipulation and federal enforcement regimes. From the Committee’s website:

The hearing will also consider the current state of the oil and gas markets and their impact on consumers, as well as solicit testimony and discussion as to the key factors the Federal Trade Commission should incorporate into its upcoming rulemaking on its new responsibility to prevent manipulation in the wholesale oil and petroleum distillate markets.

Soros told lawmakers Tuesday:

We are currently experiencing the bursting of a housing bubble and, at the same time, a rise in oil and other commodities which has some of the earmarks of a bubble.

However, while the billionaire hedge fund manager warned of bubble conditions, he added:

To be sure a crash in oil markets is not imminent.

Soros explained that oil prices have “a strong foundation in reality.”

For the Hungarian-born investor, commodity index trading is the culprit that is inflating the crude oil “bubble.” Reuters’ Chris Baltimore wrote:

Soros said there was “a strong prima facie case against institutional investors pursuing a commodity index buying strategy,” which is “intellectually unsound, potentially destabilizing and distinctly harmful in its economic consequences.”

Raising margin requirements would have no effect on commodity index buying because they use cash to finance their trading, Soros said. But raising margins “would be justified because it would discourage speculation,” he said.

Sources

“Energy Market Manipulation and Federal Enforcement Regimes”
U.S. Senate Committee on Commerce, Science & Transportation, June 3, 2008

“Oil price crash not imminent despite bubble: Soros”
Chris Baltimore
Reuters, June 3, 2008