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Billionaire George Soros Embraces Ford

The legendary investor continues to believe that the Dearborn automaker will be one of the winners in the auto market.
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The automobile sector is of particular interest to George Soros. 

The legendary investor has invested a lot of money in this industry, which is in full transformation towards electric vehicles.

Soros is indeed convinced that electric vehicles are the future of the automobile, if we were to examine his investment portfolio of companies listed on the US markets.

This obviously includes Tesla  (TSLA) - Get Free Report, the automaker which is considered the benchmark when it comes to electric vehicles. Elon Musk's group dominates its lackluster rivals in sales as well as production and market capitalization. But its lead has somewhat diminished by rivals offering more and more electric models.

Soros is betting that Tesla will preserve its leadership position; the billionaire has thus increased his stake in the manufacturer of the Model Y.

Another automaker is also increasingly emerging as a safe bet for Soros. 

Soros Buys More Ford Debt

This is Ford  (F) - Get Free Report. The renowned investor proves it by continuing to buy the debt of the group based in Dearborn, Michigan. According to a regulatory filing, the Democratic Party mega-donor holds bonds with a face value of $78 million as of September 30. This paper is convertible into shares.

As of June 30, Soros held $29.5 million in debt from Ford. He thus continued to massively acquire the group's debt during the three months that followed.

This investment shows that Soros is seduced by CEO Jim Farley's strategy, which has made Tesla its main competitor.

To gain market share fairly quickly, the Blue Oval offers two models in the most lucrative segment of the market: SUVs/pickups/trucks. The Ford Mustang Mach-E SUV was the third best-selling vehicle in the electric vehicle market in the United States from January to August, according to data from Experian. 

It was second only to Tesla's Model Y SUV and Model 3 sedan. Ford delivered 28,089 Mustang Mach-E between January and September 30, up 49% despite production constraints and bottlenecks. The Blue Oval is aiming for a production of 200,000 Mustang Mach-E per year by 2023, which should allow it to reach its goal of producing 2 million electric vehicles per year by 2026.

The company's other hope is The F-150 Lightning, the electric version of the iconic F-150, which is on track, after deliveries began last June. Between June and September 30, the firm delivered 8,760 units. This figure is expected to increase in the coming months even as Ford faces supply problems that have impacted its financial results in the third quarter.

The company recorded a net loss of $827 million in the third quarter due to a lack of parts, which meant Ford could not finish assembling between 40,000 and 50,000 vehicles. It also suffered an unexpected $1 billion increase in supplier-related costs, and a charge due to the disbandment of Argo AI, a unit developing autonomous vehicles. 

Stock Is Down 30%

Third quarter revenue, however, increased to $37.2 billion, up 2.6%.

Ford also raised its full year-year adjusted free cash flow forecast to between $9.5 billion and $10 billion, compared to $5.5 billion to 6.5 billion previously forecasted.

Ford stock is down 30.1% this year.

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."