George Soros hedge fund extraordinaire bought a huge and I mean huge slug of Class A Manchester United (NYSE:MANU) He has somewhere around 7.8% but claims he is not mounting a takeover. Basically he can’t; the Glaser family controls enough Class B shares which have super voting privileges that can out gun anything in the boardroom. Therefore no one will try.
George Soros is known to have invested in soccer (Excuse me football as non Americans refer to it) in the past. After all it is the worlds most popular sport. The stock is down a little after a summer time IPO. Manchester United is heavily indebted and will not produce huge amounts of free cash flow soon. So what’s the attraction.
According to a blog post on FT/Alphaville on Aug 20, 2012 by Joseph Cotterill the shorts are starting to circle. They think they smell blood in the water. OK there is some blood in the water. But you do not have the makings of a short raid. What you probably have is the makings of a classic short squeeze. George Soros by tying up a large junk of the public float just eliminated a lot of liquidity making shorting an even higher risk venture than normal.
So George Soros is aware of the sharks circling. Hell he may even throw some cheap hamburger in the water to excite them a little more. Right now if he may even decide to lend the stock to shorts and charge a rental fee. If the shorts beat down the price he can call the shares and create buying momentum as shorts sellers scramble to cover.
He may buy more at lower prices in the future.
Unethical you say. Hell this guy broke the Bank of England.
Illegal you say. This guy operates globally and could do this behind closed doors where you have banking secrecy that says it is not illegal. So there.
In any event isn’t it interesting that we refer to him as George Soros and rarely if ever mention any hedge fund name. It’s always George Soros this and George Soros that.
George Gutowski writes from a caveat emptor perspective.
- Billionaire George Soros buys into Man Utd (tribalfootball.com)
- Soros reveals stake in Manchester United (conservativeread.com)
- Boost for Manchester United as investment guru George Soros buys 7.85% stake (thesun.co.uk)
- A Source Tells The New Yorker That George Soros ‘Feels Hurt’ By Obama (businessinsider.com)