Paulson & Co., the hedge fund founded by billionaire John Paulson, cut its stake in the SPDR Gold Trust for the second straight quarter, while billionaire investor George Soros increased his holdings.
Paulson held 17.3 million shares in the exchange-traded fund backed by bullion as of Dec. 31, 15 percent less than the 20.3 million on Sept. 30, Securities and Exchange Commission filings showed yesterday. He is still the biggest stakeholder. Vinik Asset Management LP, Tudor Investment Corp. and SAC Capital Advisors LP also sold shares. Lone Pine Capital LLC added holdings.
In the fourth quarter, gold futures fell for the first time in more than three years, partly on sales to cover losses in equity markets. A global rout in the third quarter erased more than $9.7 trillion from the value of stocks, and hedge-fund holdings in SPDR gold shares fell by $660.5 million last quarter, data compiled by Bloomberg show. Paulson said that now is the time to invest in the metal to hedge against inflation.
“Gold was one of the best performers last year, so they sold the asset to bail them out of other losses,” Michael A. Gayed, the chief investment strategist who helps oversee $150 million at New York-based Pension Partners LLC, said in a telephone interview. “We are seeing people piling into gold again with an improvement in stock markets and commodities.”
Last month, gold jumped 11 percent, the biggest January rally in 29 years, on concern that Europe’s debt crisis would escalate, spurring demand for a haven. The Federal Reserve affirmed its benchmark interest rate will remain close to zero percent until at least late 2014, weakening the dollar and boosting the appeal of commodities as alternative investments.
Gold futures for April delivery rose 0.6 percent to close at $1,728.10 an ounce at 1:53 p.m. on the Comex in New York. The metal surged to an all-time high of $1,923.70 on Sept. 6.
“The fear trade is pulling people back to gold,” Jeffrey Sica, the Morristown, New Jersey-based president of SICA Wealth Management who helps oversee $1 billion of assets, said in a telephone interview. “We will see gold prices rise to a record this year.”
Assets in the SPDR Gold Trust, the largest ETF backed by the metal, rose to an all-time high of 1,309.92 metric tons on Aug. 8 and were at 1,278.26 tons yesterday. Global holdings in exchange-traded products were 2,390.729 tons, approaching the Dec. 13 record, according to Bloomberg data.
In a letter to investors obtained by Bloomberg, Paulson said, “By the time inflation becomes evident, gold will probably have moved, which implies that now is the time to build a position in gold.”
The euro is structurally flawed and will fall apart eventually, according to the letter. The collapse may be triggered by a Greek default, Paulson said.
Paulson, which manages $23 billion, had its worst year ever in 2011 as the Advantage Plus Fund lost 51 percent. The New York-based fund uses SPDR holdings for the gold-denominated share classes.
The company cut its American depositary receipts in AngloGold Ashanti Ltd., the second-largest stake in its reported portfolio, by 6.5 percent to 34.3 million.
Armel Leslie, a spokesman, declined to comment.
In the third quarter, Paulson reduced holdings in the SPDR gold ETF by 36 percent from 31.5 million shares. In the second half, the stake fell 45 percent.
Vinik Asset Management, the Boston-based hedge fund founded by Jeffrey Vinik, who formerly ran the Fidelity Magellan Fund, held 2.6 million shares in the SPDR gold ETF as of Dec. 31, down 775,000 shares from the end of the third quarter.
Tudor Investment, the $11 billion hedge fund based in Greenwich, Connecticut, sold an entire stake of 200,000 shares. Patrick Clifford, a spokesman, declined to comment.
Steven A. Cohen’s SAC Capital and New York-based Touradji Capital Management LP cut their positions. Stamford, Connecticut-based SAC Capital, which manages $14 billion, held 179,601 shares, compared with 184,601 in the third quarter. Jonathan Gasthalter, a spokesman, declined to comment.
Touradji Capital, founded by Paul Touradji, sold its entire stake of 45,000 shares. The hedge fund bought the securities in the third quarter. Leslie, also a spokesman for Touradji, declined to comment. Stevens Capital Management LLC sold its entire stake of 77,019 shares. GLG Partners LP sold its holding of 94,675 shares.
Soros, Lone Pine
Soros Fund Management LLC increased its stake to 85,450 shares from 48,350. Michael Vachon, a spokesman for Soros, didn’t respond to a voicemail. Lone Pine, the hedge fund run by Stephen Mandel Jr., acquired 3.75 million shares.
Money managers who oversee more than $100 million in equities must file a Form 13F with the SEC within 45 days of each quarter’s end to show their U.S.-listed stocks, options and convertible bonds. The filings don’t show non-U.S. securities or how much cash the firms hold.
Central banks around the world added 157 tons of gold to their holdings in the six months ended Nov. 30, World Gold Council data show. South Korea, Thailand, Turkey and Russia were among countries that added the metal to reserves in 2011.