Analyzing 13Fs: Soros Fund Management (George Soros Fund) Q3 2022

In today’s article, we bring you the latest update in our recurring series based on analyzing 13F filings and the latest moves of some of the world’s most renowned funds. Our original article and the main thesis on the subject can be accessed through this link.

Fund Overview

Soros Fund Management’s US-based assets under management increased to $5.85 billion from the $5.61 billion they reported last quarter, which is the first net increase after a couple of difficult quarters. It is also far from the $7.30 billion high that was reported in the fourth quarter of last year. The family office established 38 new positions during the quarter, with many of them seemingly focused on ongoing arbitrage opportunities and “distressed” sectors such as the technology sector. The fund reduced 33 positions while abandoning its stake in 39 stocks. Soros Fund Management expanded 34 positions during this quarter, solidifying a 38.2% concentration in the top ten fund holdings. This is largely in line when comparing it to the last quarter when the fund concentrated 35.8% of the AUM in the top ten holdings. Only three companies take up 5% or more of Soros Fund Management’s portfolio, including Duke Realty and Biohaven Ltd. (BHVN), but are led by Rivian Automotive (RIVN) taking up 9.19% of the AUM. Soros currently owns four large ownership stakes taking up 5% or more of Bowlero Corp. (BOWL), indie Semiconductor (INDI), Proterra Inc. (PTRA), and TPB Acquisition Corp I (TPBA). Bowlero Corp remains without a doubt the largest stake as the fund owns more than 27% of the company.

New Positions

Energy Select Sector SPDR Puts (XLE): have been the largest addition of the quarter and quickly rose to become the 15th largest holding in the portfolio. Soros likely acquired the puts in order to short the energy sector heading into 2023. XLE is currently trading at $84.43 per share and the puts take up 1.34% of AUM.

ChemoCentryx Inc: was the second-largest acquisition of the quarter and another merger arbitrage opportunity that already played itself out, generating profits for the family office. The company was acquired by Amgen (AMGN) in late October in an all-cash deal worth $3.7 billion. Former CCXI shareholders received $52 per share for their stake in the company, the stock traded between $25 and $52 per share in Q3.

Sierra Wireless, Inc. (SWIR): is yet another merger arbitrage play by Soros Fund Management, but an active one this time around. It is being acquired by Semtech (SMTC) in a 1.2 billion all-cash deal at $31 per share. The $31 acquisition price stands at a 25% premium to SWIR’s closing price before the announcement of the deal. Soros built up about a 4% ownership in the company throughout Q3 while the stock traded between $24 and 31 per share. However, SWIR currently only trades at $29 per share.

Booking Holdings (BKNG): represented the fourth largest acquisition for the quarter. The fund established a position that is now worth $17.74 million and makes up 3.00% of the portfolio. They acquired 100,000 shares of the online booking giant during Q3 while the stock traded between $1670 and $2150. However, it represents only their 59th largest holding. BKNG is currently trading at around $1964 per share.

In a similar manner, the fund established positions in companies like Agree Realty (ADC), Sarepta Therapeutics (SRPT), Union Pacific (UNP), Vulcan Materials Company (VMC), Teledyne Technologies (TDY), AMETEK (AME), Zoom Video Communications (ZM), Cboe Global Markets, Inc. (CBOE), Fortive Corp (FTV), and others, as well as shorts through puts in Global Blood Therapeutics and Financial Select Sector SPDR (XLF).

Expanded Positions

Duke Realty: Soros expanded on the DRE position one more time prior to the merger arbitrage deal actually closing last month. The deal worth $23 billion solidified Prologis (PLD) position as the largest industrial REIT. It was first acquired by the fund during the second quarter and grew to take up 5% of the portfolio prior to the closing of the deal. Soros added 6.2 million shares representing a 2,330% increase when compared to shares owned in the second quarter. The entire reported position is now worth $307 million.

Walt Disney (DIS): is one of the longer-held positions within the fund the third largest expanded position during the quarter in percentage terms. Soros Fund Management first acquired the position in the first quarter of 2020 and has since occasionally added on top of the existing position. The fund added 120,000 shares during the quarter, which represents a 330% percent increase. DIS is still a relatively small position, being ranked as the 77th largest holding and taking up only 0.20% of the AUM.

Salesforce (CRM): this marks yet another quarter in which Soros Funds added to their position in the renowned cloud-based software company, which was carefully built during the previous period. The fund kept adding to its position as it was hammered in the markets. It additionally increased by 7% this quarter. The position today represents the 19th largest holding and is worth about $97.6 million. It is currently trading at $153.35 per share and traded between $130 and $191 throughout Q3.

Spotify (SPOT): is a holding that the fund first opened the last quarter but expanded on this quarter. Soros increased the position by 60% while the company was trading in the $86 – $123 range. The position is now worth $5.40 million and as such represents the 108th largest holding in the fund. SPOT is currently selling for $75.19 per share.

Other smaller positions that were expanded upon during the second quarter were: Uber Technologies, Inc. (UBER), Las Vegas Sands Corp. (LVS), Airbnb, Inc. (ABNB), TransDigm Group Incorporated (TDG), Atlassian Corporation (TEAM), Accenture plc (ACN), NIKE (NKE), and FIGS, Inc. (FIGS), among others.

Reduced Positions

Rivian Automotive Inc: still holds the title of largest bag that the fund has held. Proving itself to be a very problematic IPO, the fund continued to further decrease its exposure to the EV manufacturer by trimming the position by an additional 8%. RIVN currently represents 9.17% of AUM. The fund entered the position during Q4 2021, paying anywhere from $89 to $172 per share. The stock of the EV company is currently trading at around $28 per share.

D.R. Horton Inc. (DHI): this has been another quarter that saw the DHI position trimmed, this time by a relatively large 12%. The fund disposed of 360,000 shares during the quarter, cutting the size of the position down to 3.01% of the portfolio from the 3.51% that was reported last quarter. DHI still represents the 5th largest holding as the fund owns 2.61 million shares that are worth $176.2 million.

Alphabet Inc. (GOOG): after expanding the position for a couple of quarters, the fund is pulling the breaks and cutting its Google exposure by 4%. They have disposed of 50 thousand shares this quarter. Alphabet remains their 20th largest holding and is taking up 1.66% of the portfolio. The company is currently trading at $95 per share.

Liberty Broadband Corp (LBRDK): prior to getting trimmed this quarter, the piece of John Malone’s media empire was their 3rd largest holding taking up 3.60% of the portfolio. However, Soros Funds cut the position by as much as 20%, having disposed of 350,000 shares during the period. Now, it is only the 14th largest holding, taking up 1.66% of the portfolio. It is currently trading at $86 per share.

Other smaller positions that were trimmed during the second quarter were: Sea Limited (SE), National Energy Services (NESR), Academy Sports and Outdoors (ASO), Piedmont Lithium Inc. (PLL), Analog Devices, Inc. (ADI), BGC Partners, Inc. (BGCP), LPL Financial Holdings Inc. (LPLA) and others.

Closed Positions

American Campus Communities: formerly known under the ticket ACC, is another successful merger arbitrage. The fund entered into the position last quarter and has fully disposed of it given that the merger has been completed. The student housing properties developer was acquired by Blackstone (BX) in an all-cash deal worth $12.8 billion. Shares of ACC were bought out for $65.47 per share. The $201 million position used to represent 3.59% of the fund.

Other large closed-down positions were also mostly successful merger arbitrages such as Meritor Inc that got acquired by Cummins (CMI), GCP Applied Technologies which got acquired by Saint-Gobain (OTCPK:CODGF), Turning Point Therapeutics which was acquired by Bristol Myers Squibb (BMY), and others.

You can see the full filings for Soros Funds and the additional 13F filers here.

Final Overview

The strategy deployed by Soros Fund Management seems to be based on two main principles. On one end, the fund is either acquiring or increasing its stakes in heavily beaten-down technology stocks, which slowly climb their way up to become some of the top positions within the portfolio. On the other end, the fund still seems to be pursuing its efforts to find attractive merger-arbitrage opportunities that are supposed to ensure stable returns in the face of the seemingly ever-degrading market environment.