Soros Joined Och-Ziff Betting on AIG Before Sandy Struck
Billionaire investor George Soros and Och-Ziff Capital Management Group LLC (OZM), the hedge-fund firm with $31.8 billion under management, added stakes in American International Group Inc. (AIG) in the third quarter before superstorm Sandy devastated the Eastern U.S.
The family office of Soros, 82, disclosed an investment of 15.2 million shares in the New York-based insurer as of Sept. 30, according to a filing yesterday. Och-Ziff tripled its stake to 33.2 million shares, it said in a filing.
AIG has fallen 16 percent from a 20-month closing high of $37.21 on Oct. 18. The firm hasn’t announced losses from the storm that made landfall Oct. 29, killing at least 100 people in the U.S. Sandy caused insured losses of $20 billion to $25 billion, according to Risk Management Solutions Inc.
“With Hurricane Sandy remaining an overhang for the group, primary insurers are now trading at levels well off recent highs,” Josh Stirling, an analyst at Sanford C. Bernstein & Co., wrote in a research note. “This trading is amplified by the fundamental uncertainty around the reasonable range of industry losses.”
AIG advanced 1.8 percent to $31.24 at 4:01 p.m. in New York, the most among 22 companies on the Standard & Poor’s 500 Insurance Index. (S5INSU) The shares have gained 35 percent this year. Flooding from the storm displaced the insurer from its Manhattan headquarters.
The U.S. cut its stake in AIG this year after a 2008 bailout that swelled to $182.3 billion. The Treasury Department sold $20.7 billion of shares in the most recent offering in September, trimming its holding to 16 percent from a majority. Chief Executive Officer Robert Benmosche is seeking to improve results to attract private investors.
AIG may benefit as prices rise for commercial coverage and the firm makes progress in efforts to boost underwriting, Stirling said in the note.
“AIG’s investors will, in due course, be rewarded handsomely for their foresight,” he wrote.
Jonathan Gasthalter, a spokesman for Och-Ziff at Sard Verbinnen & Co., and Michael Vachon, a Soros spokesman, declined to comment. Soros and Och-Ziff also disclosed AIG options. Matt Gallagher, an AIG spokesman, declined to comment.
Soros’s firm managed more than $20 billion in the 1990s when it was the world’s largest hedge-fund group. Soros and chief strategist Stanley Druckenmiller made about $1 billion from the 1992 drop in the British pound after the U.K. government abandoned a peg to a basket of European currencies.
Soros returned money to investors last year and focused the firm on managing assets for his family.
Vanguard Group Inc., the largest mutual-fund manager, also added AIG shares, including in its oldest fund. The actively managed Wellington Fund (VWELX) invests about two-thirds of its $64.4 billion in net assets in stocks and the rest in bonds, according to Vanguard’s website. It has returned 3.8 percent annually over the past five years, beating 88 percent of similar funds, data compiled by Bloomberg show.
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