DAVOS/SWITZERLAND, 27JAN10 – George Soros, Chairman, Soros Fund Management, USA, captured during the session ‘Rebuilding Economics’ of the Annual Meeting 2010 of the World Economic Forum in Davos, Switzerland, January 27, 2010 at the Congress Centre. (Photo credit: Wikipedia)
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.
Image via Wikipedia
Hedge funds are showing signs of capitulating in the market place. Many are just simply not taking new money. Can you imagine a hedge fund not wanting the leverage. That’s the poker tell. The eyes have twitched and we know what they think. Sure some of the funds are huge but when you want to take chips off the table that is the only forecast investors need to know.
Watch for some pathetic investors suing and claiming not enough notice was given. Watch for some low-level hedge funds springing to life hoping to suck in the newly freed up money flow.
But in the end you should consider it a capitulation. Cleverly done during the supposed summer doldrums when we were all consumed with the debt ceiling the big boys want to go home.
Disclosure: George Gutowski writes from a caveat emptor perspective. I do not invest in or manage a hedge fund. I have no plans to invest in or start a hedge fund in the next 72 hours as well.
Image via Wikipedia
So the annual auction to break bread and listen to Warren Buffett make comments about the economy and investments is on. You have to laud the old guy; it all goes to charity, which is a very very good thing. A seat will cost you something north of $1.5 million, plus your travel costs and probably a new suit. Then the participant eater will have marketing cred because he/she has gone to the Oracle and heard the messages directly. Berkshire Hathaway (NYSE:BRK.B) continues with its special cachet because the boss is really special.
It’s an interesting accolade. The value lies in the uniqueness. How many money managers and assorted stock jockeys can say they have had dinner with the Oracle. But no one reports on the track record of earlier attendees. Are they really smarter? How can a trained professional be smarter after one dinner which surely had wine and strong spirits involved? If you already have a few million to spend on dinner do you really need a personal Buffettolgy experience?
What claims of uber-competence do these food fighters really make? Does Warren Buffett ever look at one or two food fighters and wonder how they made it so far? Why don’t more investment guru’s offer something similar. Could you imagine dinner with John Templeton or George Soros.
Well anyway if an investment manager says “I had dinner with Warren Buffett therefore you need to pay my exorbitant fees” the correct response would be to just buy a slug of Berkshire Hathaway and get the real deal.
Disclosure: George Gutowski writes from a caveat emptor perspective. I hold no positions in stocks mentioned in this post. I have no plans to initiate new positions within the next 72 hours. I am not bidding for a dinner seat either.
Image via Wikipedia
InterOil (IOC) is exploring for natural gas in Papua New Guinea. Morgan Stanley has just successfully raised $266 million of much-needed capital and eliminated short-term liquidity issues. George Soros has been a believer and recently disclosed he owns 12% of IOC. SEC documents indicated this is George Soro’s third biggest holding.
Whitney Tilson is a bear who manages a hedge fund called T2 partners (www.tapartnersllc.com) hates the play. He insists the reserve valuations are a fraction of what is being reported and therefore feels the stock is overvalued.
InterOil Chief Executive Officer Phil Mulacek in a very recent quarterly earnings release commented
“Our delineation drilling results further demonstrate the value of our reservoir at Antelope 2.”
The headline in the press release also included this tidbit.
“The Antelope 2 horizontal well confirmed a higher condensate-to-natural gas ratio of 24-27.7 barrels per million cubic feet of natural gas, approximately 60% higher than observed at the top of the reservoir. The horizontal well also demonstrated higher porosity deeper in the reservoir than previously modelled”
DealBook reports that Whitney Tilson in a Nov 6 blast email to 2000 supposed clients said
“This is a company that has NO RESERVES — not proven, probable or even possible; just a ‘contingent resource estimate’ from a firm that InterOil paid, after shopping among firms — and has NEVER delivered on its countless promises of huge natural resource finds in over 200 press releases over more than 10 years. Sure, there’s gas there — this isn’t Bre-X — but we think there’s only a tiny fraction of what IOC claims.”
The difference in opinion is fundamental. Whitney Tilson does not believe in the engineering reports. What information does he have to back up his claim? Other than just disputing management why not put your cards on the table? Whitney if you can bust open InterOil your reputation is secure forever.
Disclosure: George Gutowski writes from a caveat emptor perspective. I hold no positions in stocks mentioned in this post.