Does George Soros Know Something About Energy That We Don’t?

George Soros is an individual who has become world famous for his prowess in the investing world. The Hungarian billionaire was born in Budapest in 1930 and survived the horrors the Third Reich in that country before fleeing to England in 1947. After eventually setting in the United States, he became experienced within the investing world and worked for various investment firms before founding his own hedge fund in 1973.

Soros is widely looked upon as an expert within the world economy, as he slowly gained his reputation through hard work. However, most in the investing world know the man through one major event that occurred in 1992. He actually risked ten billion of his own money on a speculation that would short the British pound. He was right, and was vindicated in the deal when he made an extra billion on the trade and another billion later on. Today, Soros is widely known throughout the world as “the man who broke the Bank of England.”

Thus, George Soros is widely seen as an authority in many economic issues. He recently weighed in on one particular subject, that of the energy markets. Many in this market are beginning to wonder if Soros knows something they don’t. The reason is simple: Soros recently dumped all of his holdings in Chevron (CVX), Chesapeake Energy (CHK), and NRG Energy (NRG). Expert investors who have made billions in the markets are always being scrutinized very closely, the reason being that they are the experts and thus usually not wrong.

This decision by Soros comes under some interesting circumstances for the energy sector. First of all, energy prices have been circulating very wildly on the news within the global sphere. Second, oil prices surged very briefly on the news that Saudi Arabia and Russia had agreed on an accord to freeze oil production in order to boost the prices. However, oil tumbled again when a third partner, Iran, objected to the freeze. Iran is planning on glutting the market as a means of revenge against sanctions.

Judging by recent reports from these energy companies, it might have indeed been a wise move by Soros to dump all of his stocks in them. Many of the most notable energy companies in the United States are expected to post dismal earnings reports later on this week. Another dire situation for energy companies was noted when the World Bank slashed the forecast they had given out for a barrel of oil in 2016. Instead of $51 per barrel, they said it would be $37 a barrel.

Indeed, “the man who broke the Bank of England” probably knows something we don’t when it comes to the viability of energy stocks. Investors would probably be wise to thoroughly study the movements of Soros in these markets.

Works Cited:

http://www.investopedia.com/university/greatest/georgesoros.asp?header_alt=b

http://www.georgesoros.com/the-life-of-george-soros/