George Soros has a number of things in common with Warren Buffett. Both are among the world’s most successful investors, both are multi-billionaires, both are big philanthropists and both are virtually the same age – only eight days separate their birthdays.
There is also one big difference: how they made their money. Buffett is famed for his long term, value investing approach, whereas Soros is known for his speculative investing – the man who broke the Bank of England as he’s often known, for his role in forcing the pound out of the exchange rate mechanism. Whatever the merits or otherwise of each strategy, both have been hugely successful.
But is Soros about to imitate Buffett and start buying businesses for the long term?
The announcement that the Soros Fund Management, the investment group owned by the legendary Hungarian-born investor, is to take a 25% stake in one of Spain’s biggest family-owned groups Fomento de Construcciones y Contratas is, to say the least, an interesting development.
FCC is a huge construction group with revenues of around €6.7bn in 2013. Until the Soros acquisition, its biggest shareholder was Esther Koplowitz, who inherited the business from her father Ernesto Koplowitz.
After the Soros deal, Esther will still own 25% of the business – the Barcelona-based company is also traded on the Spanish stock market.
Media reports say Soros has agreed to hold onto his stake for at least four years. His expertise seems to be needed at FCC, which has witnessed revenues and profits halve since 2009.
But could this acquisition be the sign of a new investment strategy from the world’s most successful hedge fund? Is Soros looking to buy other family businesses? Buffett has had a knack at buying many undervalued family businesses in the US and seeing them flourish under the Berkshire Hathaway brand. Nevertheless, he’s been less successful in exporting his model abroad.
Given this there is an opportunity, say experts, to emulate Buffett’s success in Europe, where family businesses are plentiful. His age probably suggests Soros isn’t about to embark on such a strategy, but could his son Robert, who is deputy chairman and president of SFM, be tempted to do so?
If so, long-term value investing will be given the ultimate accolade by the world’s most successful hedge fund. Other hedge funds might want to take note.