In the first quarter of 2018, billionaire George Soros saw his Soros Fund Management portfolio increase from $4.37 billion to $6.16 billion. At the same time, the firm increased its total 13F positions from 196 to 219, according to Seeking Alpha. Per SEC filings, the billionaire increased short positions in SPDR S&P 500 (SPY) and Invesco QQQ (QQQ) through puts. He also took on several prominent new stakes across the three-month period. One of the most notable of his purchases, though, was in convertible bonds for Elon Musk's controversial and enterprising electric car company, Tesla (TSLA).
$35 Million Convertible Bond Stake
Soros Fund Management bought up $35 million in convertible bonds for Tesla, due in March of 2019. Convertibles are known as hybrid securities which can be exchanged for a pre-set number of common shares in a company. An investor like Soros would likely buy these bonds in an effort to capitalize on changes in stock price while also enjoying the yield and security associated with a fixed-income instrument, according to reports.
Soros maintained his bonds through the end of the quarter, even as he faced severe selling pressure toward the end of March. during that time, Tesla faced growing investor reluctance as a result of questions regarding its production levels for the Model 3 sedan. The company also saw an autopilot program crash and numerous other concerns, all of which prompted Musk to issue a statement suggesting that the company was undergoing a major reorganization project. Soros kept his position through the end of the quarter, but it's unclear if he still holds the bonds at this time.
For Soros, Tesla Was One Piece of a Puzzle
In Q1, Soros was also involved with many other new investments besides the convertible bonds in Tesla. Indeed, considering that long positions in the U.S. market represent just 15% or so of Soros Fund Management's overall portfolio, there was plenty of room for other maneuverings. As of the end of the quarter, the top three individual stocks that the firm held were Liberty Broadband (LBRDK), accounting for about 11% of the fund's overall portfolio, VICI Properties (VICI), a new stake as of the end of Q1, and Caesars Entertainment (CZR). VICI emerged as a result of a bankruptcy reorganization from Caesars Entertainment and Caesars Acquisition in late 2017; as a creditor, Soros received VICI shares as a result of the process. The position accounted for about 6.4% of Soros' total 13F portfolio as of the end of March; his position represents about 7% of all outstanding VICI shares.