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Stocks

Soros shuns Abenomics with stock sales

TOKYO -- George Soros had started selling Japanese stocks.

 

   Soros Fund Management, led by the well-known investor reported Feb. 14 to the U.S. Securities and Exchange Commission that it had sold the stocks in the October-December quarter of 2013.

     Late last year, Soros became wary of the future of the global economy, including Japan. His fund has sold off some of the few Japanese stocks it owned.

     Soros is well-known for making vast amounts by short selling the British pound against the Bank of England in 1992. His opinion still attracts the attention of many investors. When Japanese stocks fell sharply last month, it is said that a rumor spread through the market that "George Soros has sold Japanese stocks."

     The report showed the rumor was true. Soros Fund Management sold in the October-December quarter stocks and call options in the exchange-traded fund WisdomTree Japan Hedged Equity Fund. Soros held shares in the exchange-traded fund during the April-September period, and call options during the July-September period of 2013. The total valuation of the fund, as of the end of September last year, just before the sales, was $50.3 million.

     Soros Fund Management also had $2.92 million in another Japanese exchange-traded fund called "iShares MSCI Japan" in the October-December period of 2012, but it sold those the following quarter.

     The report reveals that Soros' fund tends to hold issues for short periods. According to the report, the valuation of the securities managed by the fund was approximately $12 billion at the end of December 2013 in 240 different places. That means the company averages $50 million per investment. The issues held by Soros' fund for more than a year make up about 20% of the total, and include investments in Apple, Google and PepsiCo of the U.S.

     It is not clear whether Soros had sold Japanese stocks this year. It is said that earned $1 billion from the end of 2012 to the spring of 2013 by selling yen. He might have earned the money through vehicles other than Soros Fund Management. As far the fund goes, there were no signs that it had invested large amounts of money in Japanese stocks through the end of last year. It is unlikely that the fund will boost its Japan holdings significantly and sell short this year.

     Soros Fund Management also boosted holdings in S&P 500 stock index-linked exchange-traded fund's put options  significantly in the fourth quarter. The amount invested in put options by the fund almost tripled from three months earlier to $1.3 billion by the end of December. Put options profit if U.S. stocks fall. The fund purchased put options in U.S. nonferrous metals company Alcoa and sold shares in consumer-related company Visa. These moves show the fund's outlook for the global economy is cautious.

     Soros is not alone in its caution about prospects for U.S. stocks. As of Feb. 11, short positions (outstanding balance) exceeded long positions in the holdings in S&P 500 futures by speculative investors (in the non-commercial sector) of the Chicago Mercantile Exchange for the first time in one year and five months.

     It may be better to consider Soros' Japan stock sales as symptomatic of his caution on the global economic outlook. 

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