Tags: Paulson | Tudor | Gold | Soros

Soros Raises Gold Fund Stake as Paulson Joins Tudor in Selloff

Wednesday, 15 February 2012 06:44 AM

Paulson & Co., the hedge fund founded by billionaire John Paulson, cut its stake in the SPDR Gold Trust for the second straight quarter, while billionaire investor George Soros increased his holdings.

Paulson held 17.3 million shares in the exchange-traded fund backed by bullion as of Dec. 31, 15 percent less than the 20.3 million on Sept. 30, Securities and Exchange Commission filings showed. His holdings fell 45 percent from end-June, the first reduction in more than two years. He is still the biggest stakeholder. Vinik Asset Management LP, Tudor Investment Corp. and SAC Capital Advisors LP also sold shares. Lone Pine Capital LLC added holdings.

Gold futures declined for the first quarter in more than three years in the three months to Dec. 31, partly on sales to cover losses in equity markets. A global rout in the third quarter erased more than $9.7 trillion from the value of stocks. Some investors opted for cash, said Michael A. Gayed, the chief investment strategist at Pension Partners LLC.

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“Gold was one of the best performers last year, so they sold the asset to bail them out of other losses,” New York-based Gayed, who helps oversee $150 million, said in a telephone interview. “We are seeing people piling into gold again with an improvement in stock markets and commodities.”

European Crisis

Bullion jumped 11 percent last month, the biggest January rally in 29 years, on concern that Europe’s debt crisis would escalate, spurring demand for a haven. The Federal Reserve affirmed its benchmark interest rate will remain close to zero percent until at least late 2014, weakening the dollar and boosting the appeal of commodities as alternative investments.

“Gold is a storage of wealth and has the ability to transfer wealth and that’s value,” Jeremy Friesen, a commodity strategist at Societe Generale SA, said by phone from Hong Kong today. “Gold clearly has that value more than any other tender. We remain bullish on gold in the long term.”

Assets in the SPDR Gold Trust, the largest ETF backed by bullion, peaked at 1,309.92 metric tons on Aug. 8 and were at 1,278.26 tons yesterday, said the company’s website. Global holdings in exchange-traded products were 2,390.729 tons, within 0.1 percent of the Dec. 13 record, according to Bloomberg data.

April-delivery futures in New York climbed 0.7 percent to $1,729 an ounce by 4:30 p.m. Singapore time today. The metal surged to an all-time high of $1,923.70 on Sept. 6 as central banks joined investors in buying bullion to diversify assets. South Korea, Thailand, Turkey and Russia were among those who added gold to reserves in 2011.

Central Banks

“Countries which are long U.S. dollars and short gold will continue to be buyers on dips,” said SocGen’s Friesen. “That will be a trend that we’ll see for many years.” Central banks around the world added 157 tons to their holdings in the six months ended Nov. 30, World Gold Council data show.

Paulson, with $24 billion under management, had his worst year on record in 2011 as the Advantage Plus Fund lost 51 percent. The New York-based fund uses SPDR holdings for the gold-denominated share classes. He cut his American depositary receipts in AngloGold Ashanti Ltd., the second-largest stake in its reported portfolio, by 6.5 percent to 34.3 million. Armel Leslie, a spokesman, declined to comment.

Gold is “neither of much use nor procreative,” Warren Buffett, the billionaire chairman of Berkshire Hathaway Inc., wrote in an adaptation of his annual letter to shareholders that appeared Feb. 9 on Fortune magazine’s website. Berkshire took stakes in Liberty Media Corp. and DaVita Inc., filings showed.

Tudor, Stevens

Vinik Asset Management, the Boston-based hedge fund founded by Jeffrey Vinik, who formerly ran the Fidelity Magellan Fund, held 2.6 million shares as of Dec. 31, down 775,000 shares from the end of the third quarter.

Tudor Investment, the $11 billion hedge fund based in Greenwich, Connecticut, sold an entire stake of 200,000 shares. Patrick Clifford, a spokesman, declined to comment.

Steven A. Cohen’s SAC Capital and New York-based Touradji Capital Management LP cut their positions. SAC Capital, which manages $14 billion and is based in Stamford, Connecticut, held 179,601 shares, compared with 184,601 in the third quarter. Jonathan Gasthalter, a spokesman, declined to comment.

Touradji Capital, founded by Paul Touradji, sold its entire stake of 45,000 shares. The hedge fund bought the securities in the third quarter. Leslie, also a spokesman for Touradji, declined to comment. Stevens Capital Management LLC sold its entire stake of 77,019 shares. GLG Partners LP sold its holding of 94,675 shares.

Soros, Lone Pine

Soros Fund Management LLC increased its stake to 85,450 shares from 48,350. Michael Vachon, a spokesman for Soros, did not respond to a voicemail. Lone Pine, the hedge fund run by Stephen Mandel Jr., acquired 3.75 million shares.

“The fear trade is pulling people back to gold,” said Jeffrey Sica, the Morristown, New Jersey-based president of SICA Wealth Management, who helps oversee $1 billion of assets. “We will see gold prices rise to a record this year.”

Money managers who oversee more than $100 million in equities must file a Form 13F with the SEC within 45 days of each quarter’s end to show their U.S.-listed stocks, options and convertible bonds. The filings don’t show non-U.S. securities or how much cash the firms hold.

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