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Soros Fund Management

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Soros Fund Management LLC is an American, privately held, hedge fund management firm founded in 1969 by George Soros. In 2010 it was reported to be one of the most profitable firms in the hedge fund industry,[1] averaging a 20% annual rate of return over four decades.[2]

Description

Soros Fund Management is the primary adviser for the Quantum Group of Funds; a series of funds dealing in international investments.[3] The company invests in public equity and fixed income markets worldwide, as well as foreign exchange, currency and commodity markets, and private equity and venture capital funds.[4] The company is reported to have large investments in transportation, energy, retail, financial and other industries and owns stock in the Hess Corporation, Ford Motor Company, Global Ship Lease, Bluefly, and Lattice Semiconductor.[5]

History

The company was founded by president and chairman George Soros in 1969.[6]

1992 Shorting British Pound

In the week leading up to September 16, 1992 or "Black Wednesday", Quantum Funds earned $1.8 billion by shorting British pounds and buying German marks.[7] This transaction earned Soros the title of "the Man Who Broke the Bank of England". On the other hand, British government policy in the period before the ejection of the pound sterling from the Exchange Rate Mechanism of the European Monetary System had been widely criticised for providing speculators with a one-way bet.[8]

2000 Restructuring

In 2000 the CEO Duncan Hennes, and the managers of the Quantum Fund, Stanley Druckenmiller, and Quota Fund, Nicholas Roditi, resigned after large losses at Soros Fund Management.[9]

Assets at the Quantum Fund plummeted from $10 billion in 1999 when it was the largest hedge fund in the world to $4 billion losing its position as the largest hedge fund in the world.[9] The fund's loses were a result of poorly made bets on technology stocks.[9] Similarly the Quota Fund saw large losses too.[9]

The restructuring of Soros Fund Management was announced to shareholder in a letter in which George Soros detailed the plan to merge of company's flagship Quantum Fund with its Quantum Emerging Growth Fund in June 2000 to form the Quantum Endowment Fund.[10][9] Newspapers described the choice of name as an indication as to Soro's philanthropic future.[9] The letter confirmed that an outside adviser would manage the Quota Fund.[9]

Soros announced in a news conference that he intended to transform the Quantum Fund into a "lower-risk, less-speculative fund" in which the fund no longer took large bets in the markets.[11]

2008-2011

The firm acquired a stake in Lehman Brothers just before it failed in 2008.[5]

In 2009, Soros Fund Management partnered with six hedge funds in acquiring IndyMac Bank at a cost of $13.9 billion. The purchase of IndyMac Bank meant that the acquiring hedge funds controlled the banks loan servicing business estimated at $160 billion, investments and also deposits.[12]

Soros Fund Management's Quantum Fund in 2010 was reported as being responsible for creating $32 billion for its clients since 1973 making it amongst the single largest generators of profit in the hedge fund industry.[1]

In 2011, Institutional Investor reported that Soros Fund Management had $27.9 billion in assets under management and ranked sixth in the magazine's Hedge Fund 100 ranking.[13] That same year, the company partnered with Silver Lake to create a new fund called Silver Lake Kraftwerk whose focus is investments in the energy and natural resource sectors.[14]

In July of 2011 Soros announced that they would return less than $1 billion in capital to outside investors by the end of 2011. This is being done in order to avoid reporting requirements under the Dodd-Frank reform act, under which hedge funds are required to register with the Securities and Exchange Commission by March 2012. The fund will focus on family investments.[15]

Operations

It was reported in July 2011, the company's chief investment officer Keith Anderson, co-founder of the investment manager firm BlackRock, had chosen to leave the firm.[16] The chief operations officer for the fund is Abbas F. Zuaiter whose brother Ahmad F. Zuaiter is also a company executive.[17]The Soros' family is well-represented in the company's leadership; the founder's sons, Jonathan Soros and Robert Soros are co-deputy chairmans, Jonathan Soros is president and Robert Soros is a managing partner.[6][18]

References

  1. ^ a b Griffiths, Tony (October 06, 2010). "The HFMWeek 50 most influential people in hedge funds". HFMWeek. Retrieved 5 August 2011. {{cite news}}: Check date values in: |date= (help)
  2. ^ Ahmed, Azam. "Soros to Close His Fund to Outsiders". DealBook. New York Times. Retrieved 26 September 2011.
  3. ^ Michael T. Kaufman (11 March 2003). Soros: The Life and Times of a Messianic Billionaire. Random House Digital, Inc. pp. 193–. ISBN 978-0-375-70549-6. Retrieved 7 August 2011.
  4. ^ "Investing BusinessWeek". Retrieved June 13 2011. {{cite web}}: Check date values in: |accessdate= (help)
  5. ^ a b "Hoovers". Retrieved June 13 2011. {{cite web}}: Check date values in: |accessdate= (help)
  6. ^ a b Robert Slater (2009). Soros: the world's most influential investor. McGraw-Hill Professional. pp. 164–. ISBN 978-0-07-160844-2. Retrieved 7 August 2011. Cite error: The named reference "Slater2009" was defined multiple times with different content (see the help page).
  7. ^ Burton, Katherine (July 31, 2008). "Soros Successors Thiel, Howard Prove Global Bears Rule Markets". Bloomberg. Retrieved 27 July 2011.
  8. ^ Opalesque, quantumfundsonline.com (17 August 2009). "Soros Fund Management holdings $4.2 billion at June 30, 2009".
  9. ^ a b c d e f g Welsh, James (July 1, 2000). "Street Talk - Soros Hedge Fund Managers Depart". On Wall Street. {{cite news}}: |access-date= requires |url= (help)
  10. ^ Lois Peltz (5 April 2001). The new investment superstars: 13 great investors and their strategies for superior returns. John Wiley and Sons. pp. 19–. ISBN 978-0-471-40313-5. Retrieved 7 August 2011.
  11. ^ Soros' Quantum Fund Replaces Top Strategist - After Big Tech Losses, Fund Will Take A Lower-Risk Approach, "Investor's Business Daily", May 1, 2000.
  12. ^ Stephen Todd Walker (7 January 2011). Wave Theory For Alternative Investments: Riding The Wave with Hedge Funds, Commodities, and Venture Capital. McGraw-Hill Professional. pp. 366–. ISBN 9780071742863. Retrieved 2 August 2011.
  13. ^ "The 2011 Hedge Fund 100 Ranking". Institutional Investor, Inc. May 12, 2011.
  14. ^ [1] NY Times.com Peter Lattiman, Feb 24 2011, retrieved May 11 2011
  15. ^ Holmes, Robert (07/26/11). "Soros Returns Capital, Avoids Dodd Frank". TheStreet, Inc. {{cite news}}: Check date values in: |date= (help)
  16. ^ Zuckerman, Gregory (July 26, 2011). "Soros Investment Chief's Departure Comes Amid Poor Performance". Wall Street Journal. Retrieved 8 August 2011.
  17. ^ "Abbas Farouq Zuaiter". BusinessWeek. August 07, 2011. Retrieved 8 August 2011. {{cite news}}: Check date values in: |date= (help)
  18. ^ Burton, Katherine (2004-10-05). "George Soros Hands Control of Money Management Firm to His Sons". Bloomberg. Retrieved 2010-12-09.
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