NEW YORK (Reuters) - Soros Fund Management LLC added Facebook Inc (FB.O), Apple Inc (AAPL.O) and Twitter Inc (TWTR.N), but trimmed stakes in Alphabet Inc (GOOGL.O) and Amazon.com Inc (AMZN.O) in the quarter through June, according to a regulatory filing on Tuesday.
Billionaire hedge fund manager George Soros speaks during a discussion at the Clinton Global Initiative"s annual meeting in New York, September 27, 2015. REUTERS/Brendan McDermid/File Photo
The family office of billionaire George Soros also bought stakes in AT&T Inc (T.N), Chevron Corp (CVX.N) and T-Mobile US Inc (TMUS.O) and divested stakes in eBay Inc (EBAY.O), Nvidia Corp (NVDA.O), Snap Inc (SNAP.N) and Paypal Holdings Inc (PYPL.O).
Soros Fund Management also dramatically boosted its shares in BlackRock Inc (BLK.N) - the world’s largest asset management firm, overseeing $ 6 trillion - by nearly 60 percent to 12,983 total shares in the second quarter.
Other notable adjustments included paring stakes in Netflix Inc (NFLX.O), Citigroup Inc (C.N) and Wells Fargo & Co (WFC.N), but raising its shares of Pandora Media Inc (P.N) and Salesforce.com Inc (CRM.N).
Soros Fund Management took share stakes in Facebook of 159,200 class A shares during the second quarter and 54,500 shares in Apple.
A number of prominent fund managers sharply cut their holdings in Apple only weeks before it became the first publicly-traded U.S. company to be worth more than $ 1 trillion.
Einhorn’s Greenlight Capital slashed its stake by 77 percent, while Philippe Laffont’s Coatue Management unloaded 95 percent. Advisory firm Diamond Hill Capital Management cut its stake by 27 percent.
Other big holders, including Sanders Capital and Adage Capital Partners, only trimmed small amounts in the second quarter.
Soros also rejigged his energy holdings, raising stakes in Devon Energy Corp (DVN.N) and Kinder Morgan Inc (KMI.N), while dissolving his stake in the VanEck Vectors Oil Services ETF (OIH.P) and cutting exposure to Canadian Natural Resources Ltd (CNQ.TO) and Williams Companies Inc (WMB.N).
Quarterly disclosures of hedge fund managers’ stock holdings, in what are known as 13F filings with the U.S. Securities and Exchange Commission, are one of the few public ways of learning what the managers are selling and buying.
But relying on the filings to develop an investment strategy comes with some risk because the disclosures come 45 days after the end of each quarter and may not reflect current positions. Still, the filings offer a glimpse into what hedge fund managers saw as opportunities to make money on the long side.
The filings do not disclose short positions, or bets that a stock will fall in price. As a result, the public filings do not always present a complete picture of a management firm’s equities holdings.
Reporting by Jennifer Ablan; additional reporting by Trevor Hunnicutt, editing by G Crosse
(Reuters) - Litigation funding provider IMF Bentham Ltd (IMF.AX) said on Tuesday it was funding a representative complaint against social networking website Facebook Inc (FB.O) over alleged breaches of the Australian Privacy Principles.
FILE PHOTO: A Facebook panel is seen during the Cannes Lions International Festival of Creativity, in Cannes, France, June 20, 2018. REUTERS/Eric Gaillard/File Photo
The company said it would fund the complaint made to the Australian Information Commissioner against Facebook Australia, Facebook Inc and Facebook Ireland. The complaint is being handled by Sydney-based law firm Johnson Winter & Slattery.
The Australian Information Commissioner has also commenced a separate investigation into the matter, IMF Bentham said, adding a class action may follow depending on the Commissioner’s findings.
Facebook has come under intense scrutiny after it admitted in March to making mistakes in letting 50 million users’ data get into the hands of political consultancy Cambridge Analytica.
The company lost more than $ 50 billion in market value in the week after the allegations emerged that Cambridge Analytica improperly accessed data to build profiles on American voters and influence the 2016 presidential election.
Facebook had said in April that a little more than 311,000 Australian users may have had their information improperly shared with Cambridge Analytica. (bit.ly/2Ejpktb)
Facebook’s Australian arm was not immediately available for a comment.
Reporting by Ambar Warrick in Bengaluru; Editing by Himani Sarkar
Please Note: This article was first published for Income Idea subscribers on Thursday along with additional analysis and implementation ideas. All data in this article is as of 5/2/2018.
Another fund that fits this bill and sponsored by one of my favorite managers is the Guggenheim Strategic Opportunities Fund (GOF). While I have looked at it a number of times for myself, I have never written about it or invested in it myself for the simple reason that I do not buy CEFs at a premium.
I did have a number of readers ask me about the fund and that is why we are taking a deep dive into the fund today, particularly as it may be just the recipe for the uncertain fixed income markets of tomorrow.
The fund uses two primary methods for obtaining leverage.
First, the fund uses reverse repurchase agreements whereby it pledges its investments through transactions creating leverage.
As of November 2017, the fund had $ 58 million in reverse repurchase agreements with its syndicate of banks on which it paid an average weighted interest rate of 1.85%. These costs would be higher today.
Source: GOF Semi-Annual Report
The second source of leverage is a traditional credit facility with a lender.
GOF has an $ 80 million credit facility on which it pays a borrowing rate of .85% over 3 month LIBOR. On this line as of the end of November the fund had just $ 2 million outstanding as it had paid down the majority of the credit facility.
Source: GOF Semi-Annual Report
What is important to note here is that most of the CEF leverage which we have looked at is typically a spread of .7% to 1.2% over 1 Month LIBOR. In the case of GOF it is 3 month LIBOR which is a higher rate.
While generally this was a small spread, the gap is now close to .5%! As such, the fund"s current borrowing costs on this credit facility would be over 3%!
Fortunately it seems that Guggenheim is employing some smart people to run the fund, namely Scott Minerd who has been quite critical of the markets. As such, the fund has been deleveraging as of late.
Source: GOF Semi-Annual Report
The Numbers
The fund is currently distributing a market price distribution yield of 10.44% and is trading at a PREMIUM of 8.78% to its NAV, or net asset value.
Source: CEF Connect
Over the previous year the fund has continued to trade at premiums although it did come very close to parity earlier this year.
Generally speaking, the Net Asset Value has failed to grow beyond its initial IPO even though there is a growth component. THIS IS QUITE CONSISTENT with the findings of the distribution analysis. A few good years bail out many bad years however there has not been meaningful growth.
Looking back over the fund"s lifetime, we can see the fund has generally traded at a premium over the previous 7 years or so however did trade at a discount in 2015/2016 and during the financial crisis when it was trading at close to 30% discounts to NAV. This is once again consistent with "junk bonds."
Performance wise, year to date the fund has been sold off with most other CEFs. The fund is up a mere .21% on a total return basis accounting for the distribution. The price per share is down 3.27% while the NAV is down 3.04%.
Do note at the price vs NAV action early this year when the fund was thrown out and decreased 9%. This is a risk to buying a fund which is trading at a premium as any sustained sell off turns premiums into discounts, adding more misery to the underlying losses.
Over the previous year the fund did give investors a 10.28% total return. This came strictly from the distribution. The underlying price per share is down .6% while the net asset value fell 2.89%. Over distributed? AHA!
Over the last 3 years the story remains the same. The fund presented investors with a 36.17% total return while the price fell 2.9%. The underlying NAV declined 2.5%. A good 2016 bailed out the fund"s track record during this time.
Over the previous 5 years we have precisely the same story. The total return was all about the distribution. The underlying price per share declined 9.28% while the NAV declined 8.99%.
Going back 10 years would have you purchase the fund near the lows of the financial crisis. AS such, the fund has achieved phenomenal results. The fund would have a 270.8% total return (if reinvested). The price per share increased 24.11% while the NAV grew just 8.5%.
Since inception the numbers are not as good. The total return declines to 233.8% with a 4.38% price per share gain and an essentially flat NAV.
The moral of the story, the fund did a PHOENOMINAL job coming out of the financial crisis but it was quite volatile and since 2011 or so, has not grown its NAV in the greatest bull market yet.
Should have? Want signs of over distribution? Plain vanilla (AGG) and (MUB) grew their NAVs during this time.
To put the fund into perspective, we will take a look at the fund against a number of competing products, both levered and unlevered.
As far as "go anywhere" type funds, there are a number of competing closed end funds such as the BlackRock Multi-Sector Income (BIT), the PIMCO Dynamic Credit Income (PCI), and the DoubleLine Income Solutions (DSL) funds. PCI is managed by the PIMCO team and the DoubleLine fund is a representation of the famed Jeffrey Gundlach"s ideas.
I also wanted to take a look at how it does against a covered call fund such as the BlackRock Enhanced Global Dividend fund (BOE).
Lastly we can take a look at two unlevered open end funds, the Fidelity Strategic Income (FSTAX) and the PIMCO Total Return (PTTAX) funds.
Year to date on a total return basis we can see that generally speaking, GOF has lagged for most of the year and was actually the most impacted during the sell off in February. It has since rebounded and comes in the middle of the pack. For the year however (PCI) and (DSL) have been the best performers.
If we look over the last year we can see (GOF) has beat most of its peers coming in behind PCI. Interestingly (BIT) lead the way until the sell off this year. Also of note, even though also PIMCO managed, the open end Total Return Fund was the worst performer.
Over the last three years we have a similar story. PCI lead the way followed by GOF, DSL and BIT.
The equity focused BOE lags and is followed by the two open end funds which were quite stable. In either case, the Fidelity fund handily outperformed the PIMCO Total Return fund.
Looking back 5 years we essentially have PCI and GOF leading the way, followed by (BIT). The high performing DoubleLine fund however comes in at the bottom of the CEF pack simply due to its horrible performance in 2015.
Once again it shows the importance of risk management. It is not as import as to how much you make, and it is more important to focus on how much you DON"T LOSE!
This is ever so important for buy and hold investors.
To get a 10 year number we only have the (GOF) and (BOE) closed end funds along with our two open end funds. This is critical but we do not have any idea how (PCI), (BIT) and (DSL) would perform during a financial crisis.
As we can see, the two closed end funds were decimated during the crisis. While GOF recovered, BOE never did. In fact, the plain vanilla open end Fidelity income fund would provide better total returns than an equity CEF fund.
Overall, GOF has been a good fund especially if we consider that it has been generally less levered than its peers. More importantly from the risk management perspective the fund is leading the way in delevering while its peers are increasing their leverage to maintain the distribution level.
Bottom Line
Guggenheim is an experienced manager and if you want to capitalize on and follow Scott Minerd, (GOF) is a way to do so. Here is a good article on Scott Minerd"s recent thoughts.
From the pricing side, it is very tough for most closed end fund investors I know of to justify purchasing it today, or even keeping it if you already own it.
Over the previous year the fund traded at a premium to NAV of as low as .62% to as high as 11.33%.
Source: CEF Connect
As we can see, the current 8.78% premium to NAV is quite expensive over EVERY measured time period and the Z-Score solidifies that. The right time to buy it would have been earlier this year when it was trading at near parity.
Source: CEF Connect
Overall it is certainly a peculiar time for funds like GOF, PCI and DSL.
I think a great way of thinking about them is like dating a super model. Yes, they look really pretty and you have a great time dating and you get lots of envious looks. But are they the people you believe would end up being terrific soul mates to live together and raise a family?
GOF, PCI, DSL and other high yield junk bond funds have certainly become the "popular guy/gal" and people are paying premiums for them. At the same time, high quality funds and munis have been left at the alter.
Yes, they have performed exceptionally well in a terrific bull market for both fixed income and equities, but so did the housing market in the early 2000s.
The "crazy" part comes in where on one hand we see premium prices for those funds, yet the underlying fundamentals are either turning or completely falling apart such as the distribution coverage with GOF and others.
Of course, I once again have to remind, a distribution is not a dividend and you have to take an underlying look at how the fund is doing.
Bottom line, this is certainly a fund worth owning, but perhaps when the prices are quite a bit better and we have another opportunity to buy in ONCE the tornado comes through.
In the mean time, the BlackRock Multi-Sector Income Fund (BIT) will let you play in the same space at a far lower cost, a 10% discount versus an 8.78% premium and while I have not looked at it yet, the underlying distribution coverage can"t be as bad as (GOF)?
For more information on the fund, please visit the fund"s website at Guggenheim - GOF.
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TOKYO (Reuters) - A Hong Kong-based activist investment fund opposed to Toshiba Corp’s (6502.T) sale of its chip unit to a Bain Capital-led group said the deal should be renegotiated at a valuation of 3.3 trillion yen to 4.4 trillion yen ($ 30 billion-$ 41 billion).
FILE PHOTO - The logo of Toshiba Corp. is seen at the company"s facility in Kawasaki, Japan February 13, 2017. REUTERS/Issei Kato/File Photo
Argyle Street Management said on Friday that the current deal, which values the unit at 2 trillion yen, was agreed upon when Toshiba was desperate for cash. Toshiba is no longer insolvent, and was free to terminate the deal without incurring any penalty because the sale had not closed by a March 31 deadline, it said.
Toshiba should aim to list the unit if the Bain group will not agree to a higher price, it added.
Reporting by Makiko Yamazaki; Writing by Ritsuko Ando; Editing by Edwina Gibbs
JAKARTA (Reuters) - Indonesian conglomerate Astra International said on Monday it will invest $ 150 million in Go-Jek, joining the likes of Alphabet Inc’s Google in the ride-hailing start-up’s latest fundraising round.
Astra Chief Executive Prijono Sugiarto said the group had wanted to invest in Go-Jek for some time but had been looking for the right timing.
“We see that Go-Jek is special, its development is significant,” Sugiarto told a news conference.
The announcement comes weeks after sources told Reuters that Singapore state investor Temasek was also among those investing in Go-Jek as part of a $ 1.2 billion fundraising round.
The funding will help Go-Jek compete with deep-pocketed rivals as players rapidly expand their app-based services and digital payments in Southeast Asia.
Reporting by Cindy Silviana; Editing by Ed Davies and Gopakumar Warrier
TEL AVIV (Reuters) - Swiss-Israeli technology firm Sirin Labs said on Thursday it had raised $ 118 million in an initial coin offering (ICO) to support the development of an open source blockchain smartphone.
Moshe Hogeg, co-founder and president of British-Israeli start-up, Sirin Labs AG, manufacturers of Solarin, a mobile device with unprecedented levels of technology and security, speaks during an interview with Reuters at their offices in Tel Aviv, Israel May 16, 2016. REUTERS/Amir Cohen TPX IMAGES OF THE DAY - S1BETHKDEGAB
ICOs allow startups founded on cryptocurrency technologies such as blockchain to quickly raise capital by issuing virtual tokens to investors.
Such offerings have become more common in the past year, but Europe’s top markets regulator warned last month they were “extremely risky and highly speculative investments.”
Sirin, which has recruited soccer superstar Lionel Messi to be its brand ambassador, said it had raised the money from 5,600 people globally within the first 24 hours and would continue the offering for another 12 days.
“These are our potential clients. We think they will be the first to buy the phones,” Moshe Hogeg, CEO and founder of Sirin, told reporters.
The ICO will help fund its secure blockchain phone, as well as a blockchain personal computer. The company said the phone, which should be on the market near the end of next year, benefits from enhanced security and the ability to carry out fee-less transactions.
Hogeg said his target had been to raise $ 75 million - the amount needed to develop the phone. The additional funds will enable the company to increase its production and invest more in sales and marketing.
Reporting by Ari Rabinovitch and Tova Cohen; Editing by Mark Potter
