Six weeks after the end of each quarter is the time small investors can go treasure hunting and see what the big guys have been buying and selling. The Security and Exchange Commission requires that asset management companies with assets under management (AUM) of more than $100 million disclose their equity holdings that are traded in the United States. Hedge funds and other asset management companies like Buffettt’s Berkshire Hathaway need to disclose their holdings as of the last day of the relevant quarter no later than 45 days after the quarter ends.
On Wednesday, Aug. 14, the big managers disclosed their positions as of June 30, and there were a few surprises among the widely followed investors.
Warren Buffett for example reduced his holding in Johnson & Johnson by 65 percent to 10.3 million shares during the second quarter according to the 13F filings.
Buffett reduced other consumer stocks such as Procter & Gamble by 19 percent and Kraft foods by 25 percent. He also sold his entire Intel stake worth $204 million.
The most important new positions in Buffett’s portfolio include Dutch industrial Philips, where he invested $1 billion during the second quarter and National Oil Well, a company that produces oil and gas exploration equipment. According to another regulatory filing on Aug. 3, the total cash position of Berkshire is now $40.7 billion, an increase of 7.5 percent. Some traders speculate that Buffett might use some of the cash to pay out counterparties for canceling insurance contracts on municipal bonds. Berkshire had promised insurance in case of default of some municipal bonds to the tune of $16 billion in notional, according to the regulatory filing.
Soros and Paulson Add to Their Gold Holdings
Legendary Billionaire investor George Soros doubled his investment in gold bullion, increasing his share of the SPDR Gold Trust ETF to 884,400 shares over the second quarter. Many hedge funds use the ETF—according to the SPDR prospectus the ETF shares are backed by physical gold—to gain direct exposure to bullion without having to physically store it. Soros has been ambivalent on the metal and is not an outspoken “Gold Bug”—in 2009 he called it “the ultimate asset bubble”—although he does invest heavily in it from time to time, only to reduce the position later, as he did in 2011.
John Paulson, another big name in the hedge fund business—he is best known for making $3.7 billion betting on falling subprime real estate—even offers a Gold Share Class for his flagship “advantage” fund. Returns of this fund are measured in gold and only indirectly in U.S. dollars. Paulson boosted his share in the SPDR Gold Trust ETF by 26 percent to 21.8 million shares, worth $3.39 billion. According to a Bloomberg article, he also bought shares of gold mining company, NovaGold Resources Inc. and now has 44 percent of his U.S. equity position tied to bullion.
Gold Has Further Upside, Says Sandstorm Gold CEO
“The macroeconomic environment for gold is bullish, most people would agree that the price of gold has more to go up,” says CEO and President Nolan Watson of Sandstorm Gold Ltd. in an interview with The Epoch Times. The Vancouver, British Colombia, company provides capital for mines in exchange for a fixed portion of the annual production of the mine at a fixed price and is going to be listed on the New York Stock exchange on Monday, Aug. 20.
As to why Paulson and Soros might be buying, the Sandstorm CEO had the following insight: “The governments of the world have got themselves into the position where the only way out is printing money. And if printing money is the only solution, then you have to own hard assets of which gold is one.”
While the big hedge funds have been buying the gold bullion ETF, Watson thinks that his company is a good alternative to invest in bullion and gold mining stocks. “Our business model eliminates a lot of the risks that you have when investing in gold mines. Even if the gold price goes higher, you could lose money if the margins of the miners decrease [due to cost inflation]. With Sandstorm, if the price of gold goes higher, our cost stays fixed and our gross margin increases [even more than the gold price], so we make more and more money.”
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