Each business day HedgeCo.Net keeps you informed with the top hedge fund industry news, opinion and insight from around the globe. From the latest hedge fund launches, to the impact of regulation, competition, and investor activism - we track the topics and people that make a difference to you.
West Palm Beach – Billionaire investor George Soros bought an $811 million stake in Petroleo Brasileiro SA in the second quarter, making the Brazilian state-controlled oil company his investment fund’s largest holding.
As of June 30, the stake in Petrobras, as the Rio de Janeiro-based oil producer is known, made up 22 percent of the $3.68 billion of stocks and American depositary receipts held by Soros Fund Management LLC, according to a filing with the U.S. Securities and Exchange Commission. Petrobras has since slumped 28 percent.
Soros has increased his mining and commodities holdings, a move that accelerated in the first quarter with purchases of such companies as Cia. Vale do Rio Doce , the world’s largest iron-ore producer, and Talisman Energy Inc. , a Canadian oil and gas company. In November, Petrobras announced the discovery of Tupi, a field with as much as 8 billion barrels of reserves, making it the largest find in the Americas since 1976.
“Petrobras has something that other oil companies don’t have: oil — lots of it and they’re going to find more,” said Ricardo Kobayashi , equity fund manager with UBS Pactual SA in Rio de Janeiro, which manages about $5 billion of stocks, including shares in Petrobras. “If you can buy now and hang on, if you have the staying power, it’s great.”
Tupi is part of a new deepwater offshore region known as the pre-salt that may contain as much as 50 billion barrels, according to Peter Wells , oil analyst with the U.K.’s Neftex Petroleum Consultants Ltd.
CityWire.co.uk- Punch-drunk investors have – perhaps a little predictably – interpreted the news as Paulson preparing to call the bottom of the market. And it is certainly an interesting development from the man widely considered to be the ‘greatest’ financial speculator since George Soros.
Some words of caution, though. All of today’s reports explicitly stress that the launch of the fund is not yet a forgone conclusion – a deliberate message that almost certainly emanates from the great man himself.
Like many others before him, Paulson appears to be using the media to test investor appetite for such a fund (so much cheaper and quicker than marketing or one-to-one meetings).
Mining MX- The question as to whether the oil price has been driven higher by speculators is highly emotive. Many supporters of the idea want a clampdown on speculation while others say that would be dangerous and futile interference in the market. Oil-producing cartel Opec blamed speculators and a weak dollar for US$45 of the price when it hit $142/barrel.
The oil price has doubled in a year and at the time of writing was trading below its peak of more than $140/barrel. Opec’s views on speculation received support from a serious source: George Soros, the billionaire hedge fund manager who has himself profited massively from speculation in the past. Soros told a US Senate Committee last month that a massive bubble had built up in the oil market.
Houston Chronicle – Billionaire investor George Soros told a Senate panel Tuesday that the run-up in oil prices has "some of the earmarks" of a bubble and that institutional investors stampeding into commodities are helping raise prices.
Appearing before the Senate Commerce, Science and Technology Committee, the famous hedge fund manager and supporter of liberal causes described the pension funds, university endowments and other large institutional investors pouring billions of dollars into commodity index funds as reminiscent of a craze to add insurance to portfolios that he said led to the stock market crash of 1987.
"In both cases," Soros said, "the institutions are piling in on one side of the market, and they have sufficient weight to unbalance it.
"If the trend were reversed and the institutions as a group headed for the exit as they did in 1987, there would be a crash."
Baltimore Sun- The price of Cadbury PLC’s Caramello candy bar is up 10 percent over the past 12 months, raising a sticky question: Are hedge funds to blame?
Soaring cocoa prices are driving up the cost of chocolate around the world. The chocolate industry points its finger at speculative buying by professional investors, especially hedge funds.
Hedge funds have been accused of many things over the years, including almost bankrupting countries (the 1997 Asian currency crisis), triggering a run on the pound ( George Soros in 1992), threatening the integrity of the U.S. financial system (Long-Term Capital Management in 1998) and fraud (Bayou Management LLC in 2005). This is their first fight with chocolatiers.
Reuters- Billionaire hedge fund manager George Soros said on Wednesday the current rebound in stock markets is only a bear market rally because monetary authorities are unlikely to be able to handle the credit crisis.
Soros told a seminar at the London School of Economics, "The prevailing market opinion is that this crisis is like previous ones. … Markets have been rallying on that. But I think it’s actually just a bear market rally based on a false conception the authorities can handle all these crises.
"This time the ability of the authorities to handle the crisis is constrained — they’ll not be able to avoid a recession," he said.
