Billionaires Soros, Loeb cut YPF holdings as oil prices tumble

11/15/2014

Billionaires Soros, Loeb cut YPF holdings as oil prices tumble

KATIA PORZECANSHI and CAMILA RUSSO

NEW YORK (Bloomberg) -- Billionaire fund managers George Soros, Daniel Loeb and Richard Perry cut their stakes in Argentine state-run oil company YPF SA in the third quarter as Brent crude posted the biggest losses since 2012.

Soros Fund Management LLC sold about $17 million of YPF American depositary receipts to take a 3.4 percent stake in the company as of Sept. 30, according to a Nov. 14 filing. Loeb’s Third Point LLC reduced its holding by 2.5 million shares, or $92.5 million, to a less than 1 percent stake. Perry Capital LLC said Nov. 13 it sold some of its YPF shares in the period, leaving it with a 1.2 percent holding.

The New York-based hedge funds trimmed their holdings in the third quarter as YPF, which was expropriated by Argentine President Cristina Fernandez de Kirchner in 2012, reached a 30- month high in the stock market and oil began to slide amid rising global output. The oil company has since lost 11 percent in the fourth quarter as crude plunged to four-year lows.

YPF remains Soros’s largest position and has become a widely held security among hedge funds betting on an investment boom once Argentina settles with creditors from its 2001 default. Kyle Bass’s Hayman Capital Management LP bought a $79.2 million stake in the third quarter on speculation the energy company will be the main beneficiary of capital inflows when the legal dispute is resolved, he said last week.

Argentina defaulted on its foreign bonds in July after Fernandez refused to comply with a U.S. court order to pay investors from 2001 she calls “vultures,” led by Elliott Management Corp., when paying restructured debt. The nation hasn’t sold bonds abroad in more than 13 years, and is prevented from doing so until the dispute is resolved.

‘Primary Beneficiary’

“Once the issues with the vultures have passed, Argentina will attract hundreds of billions of dollars of FDI,” Bass, 45, said in a statement e-mailed Nov. 14. “YPF will likely be the primary beneficiary of these capital flows.”

Argentina, which has the world’s second-largest shale gas reserves concentrated in the Vaca Muerta deposit in Neuquen province, posted a $5.2 billion energy deficit through September, according to the national statistics agency.

Fernandez seized a 51 percent stake in YPF from Spain’s Repsol SA in 2012, arguing that the company was failing to invest in exploration and production amid declining output. The $13.1 billion company, now run by former Schlumberger Ltd. executive Miguel Galuccio, beat analyst estimates and increased gas output by 26 percent in the third quarter.

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