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Soros Fund Management starts new positions in MSFT, FDX, TEVA, HAL, Sells DAL, UAL – 13F Flash (F)

Smita Nair

Soros Fund Management's new trades in Q313 (Part 6 of 6)

(Continued from Part 5)

Soros fin2


Soros Fund Management is a large private fund run by the legendary team of famed investor George Soros. In Q3 2013, it started new positions in Microsoft Corp. (MSFT), Fedex Corp. (FDX), Teva Pharmaceuticals (TEVA), and Halliburton (HAL), and sold Delta Airlines (DAL) and United Continental Holdings (UAL).

Abbreviated financial summaries and metrics for these securities are included below. Detailed analysis and recommendations require a subscription (more information at the bottom of the article).

Why sell United Airlines (UAL)?

United Continental Holdings (UAL):

United Continental Holdings Inc. (UAL) stock has climbed this year but is yet to keep pace with the gains experienced by its peers. The company reported a profit of $590 million for the third quarter, an improvement of 13.5% year-over-year or $1.51 per diluted share. Although it reported the highest level of quarterly profits since the third quarter of 2011, it said its financial performance did not meet expectations and said there were several key drivers for the lower-than-expected passenger revenue results. The first is related to the demand forecast which was biased toward accepting too many low-yield bookings early in the booking curve that resulted in very high load factors and a weak yield mix. Another reason was suboptimization of its fleet. Due to operational reliability issues experienced with Boeing 747 aircraft, the company had to move its entire 747 fleet to San Francisco to increase its maintenance touch points and provide better spares and swap capability to minimize operational issues. A third factor was increased competitive pressure in the Pacific region, especially in China. The Pacific unit revenue declined 9.4% year-over-year, driven by capacity growth from domestic and international competitors in China and by an additional headwind of $55 million in the quarter due to yen weakness. The company said it is taking efforts to resolve these issues and expand its margins through revenue improvements and cost reduction.

United Continental Holdings, Inc. is the Chicago-based parent of United Airlines, Inc and Continental Airlines, Inc (Continental). It provides passenger and cargo air transportation services through its subsidiaries. The company is the successor of UAL Corporation, which agreed to change its name to United Continental Holdings in May 2010, when a merger agreement was reached between the United and Continental Airlines.

UCH has major operations at Chicago–O’Hare, Cleveland, Denver, Guam, Houston–Intercontinental, Los Angeles, Newark (New Jersey), San Francisco, Tokyo–Narita and Washington–Dulles. UCH’s United Air Lines, Inc. controls several key air rights, including being one of only two American carriers authorized to serve Asia from Tokyo-Narita. Additionally, UCH’s United is the largest U.S. carrier to the People’s Republic of China and maintains a large operation throughout Asia. UAL was incorporated under the laws of the State of Delaware on December 30, 1968. Its world headquarters is located at 233 South Wacker Drive, Chicago, Illinois.

Soros Fund Management was formerly a famed global macro hedge fund run by George Soros, a multi-billionaire investor, who is famous for betting against the British pound earlier in his career. The fund was started in 1969 and in 2010 was reported to be one of the most profitable hedge funds in history, earning over 20% annual returns over 40+ years. The firm formerly was the adviser to the famous Quantum group of funds, but now is private.

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