For the billionaire activist investor George Soros everything that glitters had better be gold because the seasoned campaigner is investing heavily in the industry.
Soros had been investing big bucks in gold before but went on a three-year break and now he has once again become interested in the sector. According to Monday’s reports and filings, Soros announced a stake in SPDR Gold Trust ETF (NYSEARCA:GLD). The investor bought about 1.05 million shares in the first quarter. He also upped his stake in the ETF from 8,100 shares to 51,700 in the fourth quarter.
Soros’ other huge bet includes Barrick Gold Corp (NYSE:ABX). According to the latest Securities and Exchange Commission files, Soros owns about 19.4 million company shares, which makes his stake worth $263.7 million. This gives the investor a 1.7% stake in the company. Barrick Gold has become Soros’ biggest holdings listed in the United States.
Soros is certainly following his own instincts because his fellow activist investor John Paulson has reduced his investment in SPDR by 17%. Paulson who is known as one of the most seasoned gold investors now holds about 4.8 million shares.
Soros may be making these investments as a result of his pessimistic outlook on the international financial market. He believes that China’s current economic uncertainty is quite similar to the infamous 2008 recession. He thinks that China’s growth will not be able to save itself from a disruptive collapse.
An average investor has every reason to believe Soros’ words because the investor has earned big bucks through ups and downs of the market. According to a few sources Soros is currently worth $25 billion and his key to success is these kinds of bets. He became a legend back in 1992 when he earned $1 billion in just one day from his $10 billion bet against the British Pound.
Soros’ fears regarding China are certainly being mirrored by a few other experts on the Wall Street as well. Soro’s ex-hedge fund manager, Stanley Druckenmiller, believes that China may be in the middle of a very dangerous debt explosion.
Despite his fears, Soros still has investments in the other half of the market. The billionaire investor owns relatively smaller stakes in the currently struggling Yahoo (NASDAQ:YHOO), Apple Inc. (NASDAQ:AAPL) and Gap (NYSE:GPS). He also has stakes worth $80 million in Zoetis (NYSE:ZTS) and eBay (NASDAQ:EBAY). However it does not take a genius to figure out that Soros is not too confident in the market. His hedge fund reduced its holdings $4.5 billion from the previous $6.1 billion.
With two well-known and trusted investors, Soros and Paulson, going in opposite directions, it would be interesting to see analysts’ reactions. We can assume at this point that one of them may have it wrong. With major investments in the broader market, majority of the hedge funds may be hoping that Soros has it wrong. To be fair, one cannot deny the uncertainty surrounding China and its financial state. For the time being, one of the biggest examples of the region’s impact on the US stock market is Apple Inc. (NASDAQ:AAPL).