Hedge fund Eton Park Capital Management LP raised its stake in YPF SA while billionaire George Soros sold in the first quarter before Argentina took control of the oil producer, causing the stock to plummet.
Eton Park, run by former Goldman Sachs Group Inc. (GS) partner Eric Mindich, bought 2.17 million American depositary receipts to take its position to 11.95 million ADRs as of March 31, according to a regulatory filing yesterday. The stake was worth $158 million based on today’s closing price of $13.18, down 54 percent from $339 million on March 30. In the same period Soros Fund Management LLC sold all of its 860,255 ADRs that were worth $29.8 million, according to a separate filing.
Soros, the Hungarian-born investor who increased his fortune by 3.5 percent this year, averted YPF’s slump to the lowest in nine years as President Cristina Fernandez de Kirchner seized 51 percent of YPF from Spain’s Repsol YPF SA (REP) on April 16. The stock began falling in March after Argentina’s Chubut and Santa Cruz provinces withdrew operating licenses on YPF fields.
“Eton Park clearly had no idea this was coming,” Peter Rup, chief investment officer at Artemis Wealth Advisors LLC in New York, said in a telephone interview today. “Those are the risks that are involved in borderline frontier markets.”
Jonathan Gasthalter, an external spokesman of Eton Park, declined to comment on the firm’s YPF holding in an e-mailed response to questions yesterday. YPF was Eton Park’s third-largest holding at the end of the first quarter.
YPF (YPF) slumped 7.3 percent today after the company sought waivers with creditors to avoid default and delisting on the New York Stock Exchange. Terms on a “significant portion” of its debt allow creditors to seek early repayment after a nationalization, YPF said in a 20-F filing to the U.S. Securities and Exchange Commission today.
Fernandez seized control of YPF after charging that Repsol managers allowed oil output to dwindle because they didn’t invest enough. The Madrid-based company denies the claim and began legal action against Argentina to gain compensation.
Argentine Planning Minister Julio De Vido and Deputy Economy Minister Axel Kicillof will oversee the running of YPF for another 30 days before the government formally takes control, according to a notice in today’s official gazette.
Repsol is seeking $10.5 billion from Argentina and will line up behind companies from Exxon Mobil Corp. to Unisys Corp. yet to be repaid by the most-sued nation on earth.
Funds advised by Eton Park, Capital Guardian Trust Co. and Capital International Inc. bought 3.3 percent of YPF from Repsol for $500 million on Dec. 23, 2010. The New York-based firm manages about $12 billion, down from a 2007 peak of $14 billion.
Eton Park’s biggest holdings are News Corp. (NWSA) and Nielsen Holdings NV (NLSN), according to the filing. The firm is Buenos Aires-based YPF’s fourth-biggest shareholder after the government, the Argentine Eskenazi family’s Petersen Group and Lazard Asset Management LLC, according to data compiled by Bloomberg.
Mindich also acquired shares in U.S. discount retailer Dollar General Corp. and cable television provider Liberty Global Inc. and sold aerospace-components maker Goodrich Corp. in the first quarter, according to yesterday’s filing.
Eton Park is the second-biggest outside holder of ADRs in Argentine energy company Pampa Energia SA after billionaire Joe Lewis, according to data compiled by Bloomberg. Argentina barred Eton Park from investing in an electricity transmission company in 2007, saying it didn’t know enough about the industry.
Soros has his biggest holding in South American farmland owner Adecoagro SA that includes land in Argentina, Brazil and Uruguay. He sold a position in Google Inc. (GOOG) worth $168 million in the first quarter, in addition to shares in financial services holding company KeyCorp (KEY) and Delta Air Lines Inc. (DAL) He bought fuel distribution and ammonia-producer CVR Energy Inc., Suntrust Banks Inc. (STI) and Chevron Corp. (CVX) in the first quarter.
Soros’ fortune has increased 3.5 percent this year to $22 billion, making him the 19th richest person, according to the Bloomberg Billionaires Index.
Repsol said April 24 its YPF unit invested more than $20 billion in Argentina since 1999, refuting the government’s claims that it had failed to invest enough.
The takeover denies Repsol access to unconventional energy reserves in Argentina, increases its exposure to Europe, and may lead to a permanent cut in cash flow and a “large balance sheet writedown,” Moody’s Investors Service said the same day.
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