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George Soros Cut Petrobras Stake in Second Quarter

Date: Monday, August 17, 2009
Author: Saijel Kishan and Andres R. Martinez, Bloomberg.com

Billionaire George Soros cut his stake in his biggest holding, Petroleo Brasileiro SA, in the second quarter while buying more shares of other energy producers.

His New York-based hedge-fund firm, Soros Fund Management LLC, sold 22 million U.S.-listed common shares of Petrobras, as the Brazilian oil company is known, according to a filing today with the U.S. Securities and Exchange Commission. Soros bought 5.8 million of the company’s U.S.-traded preferred shares.

Soros is taking advantage of the spread between the two types of U.S.-listed Petrobras shares, said Luis Maizel, president of LM Capital Group LLC, which manages about $4 billion. The common shares were 21 percent more expensive than preferred today, according to data compiled by Bloomberg.

“He knows he held a voting right in the common shares that would never translate to actual power,” Maizel said in an interview from San Francisco. “He’s just playing the spread.”

Petrobras preferred shares have also a 10 percent additional dividend, said William Landers, a senior portfolio manager for Latin America at Blackrock Inc.

“Given that there will most likely never be a change in control in the company, I see no reason to pay a higher price for the common shares.” Brazil’s government controls Petrobras and has a majority stake of voting shares.

Hess Stake

Soros boosted his stake in oil company Hess Corp. to 5.1 million shares as of June 30 from 3.7 million at the end of the first quarter, according to the filing. Hess was Soros’s second- largest holding. He also added to stakes in Houston-based Plains Exploration & Production Co. and bought shares in Calgary-based Suncor Energy Inc. and InterOil Corp. in Sydney.

Soros’s company oversees about $24 billion. His Quantum Endowment Fund returned 9.3 percent in the second quarter. Hedge funds gained an average of 9.1 percent during the period, according to data compiled by Hedge Fund Research Inc. in Chicago. The filing doesn’t reflect the Soros’s holdings in cash or other securities.

Michael Vachon, a spokesman for Soros, declined to comment on the holdings.

Soros cut his stake in Potash Corp. of Saskatchewan Inc., selling 4 million shares of the fertilizer producer while investing in Monsanto Co., the world’s largest seed producer.

Money managers who oversee more than $100 million in equities must file a Form 13F within 45 days of each quarter’s end to list their U.S.-listed stocks, options and convertible bonds. The filings don’t show non-U.S. securities or how much cash the firms hold.

Soros’s biggest sale in the second quarter was his stake in ConocoPhillips, the second-largest U.S. refiner after he sold 4 million shares. The hedge fund also sold its stake in Macy’s Inc., the second-biggest U.S. department-store chain.

To contact the reporters on this story: Saijel Kishan in New York at skishan@bloomberg.netAndres R. Martinez in Mexico City at amartinez28@bloomberg.net;