Global investor and philanthropist George Soros is back doing what he does best - making a fortune by exploiting financial turmoil. According to a regulatory filing last week, Soros Fund Management raised its stake in Lehman Brothers from 10,000 shares in March to 9.47 million common shares, representing 1.36 per cent of the total outstanding, at the end of June.
Lehman's shares are down 75 percent so far this year as the beleaguered investment bank fights its way through the credit crunch and liquidity crisis. Soros probably thinks the time is right to pick up a bargain with the fourth-largest US investment bank, although the value of the stake has declined from USD187.7m at quarter-end to USD153.5m on August 15 following an 18 per cent fall in Lehman's share price over the past six weeks.
But that's not all. Soros Fund Management also bought a USD811m stake in Petroleo Brasileiro in the second quarter of this year, making the Brazilian oil company better known as Petrobras its largest holding.
Soros has been increasing his mining and commodities holdings and as of June 30, the stake in Petrobras made up 22 per cent of the USD3.68bn in stocks and American depositary receipts held by Soros Fund Management, according to the firm's filing with the US Securities and Exchange Commission.
Soros is a renowned investor and his macro investing strategy is watched closely by hedge fund managers, some of whom follow his investment picks. But for all his reputation, Soros is not infallible; his funds were big losers (along with Long Term Capital Management) when Russia defaulted on its debt in 1998. Since the end of June, the Petrobras share price has fallen 28 per cent. Nevertheless, given Soros's record, investments like those in Lehman and Petrobras make the market sit up and take note.