Another Soros Buy

I'll follow up a bit on the subject of yesterday's entry ... what is George Soros investing in these days?

Soros Fund Management has of late increased the size of its position in the investment bank Lehman Brothers. At the end of the first quarter of the year, SFM owned only 10,000 shares of Lehman. But by the end of the second quarter, June 30, it owned 9.47 million.

He is fishing in troubled waters. Lehman's shares have fallen by 75% so far this year as the credit crunch has played itself out. When Bear Stearns tanked in March and had to sell itself for the proverbial song, rumor had it that Lehman was 'next.'

Indeed, the SEC has reportedly investigated those rumors, on the theory that they may have been spread by stock munipulators.

Soros' confidence may itself prove an important shot in the arm for Lehman.

Meanwhile, today's Wall Street Journal, specifically the "Deals & Deal Makers" column, paints a doom-and-gloom portrait of Lehman's present situation, saying that it is likely the bank will report third quarter losses, "instead of the modest profit they previously expected."

The 3d quarter isn't over yet. I suspect Lehman itself is encouraging such reports, in order to lower the bar so that if it DOES have to report 3d quarter losses when the time comes, the street will regard the report as "old news."

Have I mentioned lately that nothing I say in this blog should be regarded by any rational person as investment counsel? If not: consider it mentioned!

Soros and Petrobras

Billionaire George Soros is increasing his holdings in the commodities and mining areas.

In accord with this general move, he has purchased an $811 million stake in the Brazilian state controlled oil company Patrobras (more formally known as Petroleo Brasileiro SA).

The general move toward commodities is one in which Soros and the entities he controls have a lot of company. The usual "herd of independent minds" is thundering across that plain.

The move into Petrobras in particular may have been catalyzed by that company's announcement in November of the discovery of a rich new oil field.

Bloomberg is quoting Ricardo Kobayashi, an equity fund manager with UBS Pactual SA, in Rio de Janiero. "Petrobras has something that other oil companies don't have: oil -- lots of it and they're going to find more. If you can buy now and hang on, if you have the staying power, it's great."

But you might need a lot of patience, and deep pockets (although not necessarily pockets of Sorosian depth!) to have that staying power, because things are and will likely for some time remain rocky for Petrobras.

Its price on Brazil's stock exchange peaked at above 50 Reals back in the spring and has fallen to below 33 Reals since.

The contention of bullish and bearish influences upon Patrobras may be a fascinating saga in the making.