George Soros is betting on the auto industry.
The billionaire continues to invest in this sector, which is in the process of abandoning gas cars in favor of electric cars, while public policies in Europe in particular, provide incentives towards green vehicles.
He thus chose his winners and losers. Initially Soros bet on the upstart Rivian, the Chinese NIO (NIO) and, to a lesser extent, on Lucid Group (LCID). But he seems to have changed his strategy, preferring to bet on the car manufacturers who have the capabilities to mass produce. This can be deduced from the changes he just made in his U.S. equity portfolio in the third quarter.
The Democratic Party's mega donor increased his stake in Tesla and continued to buy the debt of Ford. In contrast, Soros continued to liquidate his Rivian shares. He only held 16.36 million Rivian (RIVN) shares as of September 30, according to a regulatory filing.
That's down 8.2% in the second quarter which ended June 30. The shares, which were worth $538.4 million as of September 30, have seen their value melt away to $486 million, based on the Irvine, Calif.-based automaker's last share price.
Rivian stock is down 71.4% this year.
Supply Chain Issues
The company is struggling to manage ramp-ups and supply chain disruptions. During the third quarter, the firm widened its losses, recording a net loss of $1.72 billion, against $1.23 billion in the third quarter of 2023.
"Throughout the quarter, our cost of materials was impacted by inflationary pressures, which we believe will continue to have an impact on our gross margin for the near future," Rivian said in a letter to its shareholders.
The net order book shows 114,000 units apart from the 100,000 orders by its shareholder Amazon (AMZN). The problem is knowing when Rivian will be able to deliver these vehicles.
A second shift has begun at its Normal, Illinois plant, but Rivian has not increased its goal of producing 25,000 vehicles in 2022.
"Our core focus remains on ramping production," the company said. "The demonstrated production rates within our Normal factory continue to give us confidence in our systems, equipment, and team members’ ability to ramp our production lines. However, we believe that supply chain constraints will continue to be the limiting factor of our production."
Rivian currently produces the R1S SUV, R1T pickup/truck and EDV commercial van.
Soros also remains negative on Lucid Group, Tesla's other young rival. The billionaire still holds put options for 400,000 Lucid shares. In other words, he believes the stock price will go down in the short term.
Soros Still Invests in Chinese NIO
On the other hand, the legendary investor maintains his investment in Chinese electric vehicle maker NIO, of which he holds two bonds, one with a face value of $115.32 million and the other with a face value of $25.33 million.
Stock market regulations require managers of funds with more than $100 million in U.S. equities to file a document, known as a 13F, within 45 days of the end of the quarter, to list their holdings in stocks that trade on U.S. exchanges.
The value of Soros' U.S. equity portfolio rose 4.3% quarter-over-quarter to almost $5.9 billion. Soros Fund Management is a family office that manages public and private equity.
"SFM invests globally in a wide range of strategies and asset classes, including public equities, fixed income, commodities, foreign exchange, alternative assets and private equity," the firm says on its website.
Soros, whose net worth is estimated at $8.5 billion, up $1 billion, as of November 22, according to the Bloomberg Billionaires Index, is well known for pouring money into philanthropic efforts. Most of his firm's assets belong to Open Society Foundations, which supports "people across the world who work for justice, equity and free expression."
