Famed hedge fund manager and billionaire George Soros is making a bold move by selling his shares of several top oil companies. The billionaire recently sold his holdings in Chevron, NRG Energy and Chesapeake Energy. The canny Soros has became famous on Wall Street for being able to predict days, weeks and even months ahead of how the markets will shift.
George Soros’ outright selling of oil stock reported by The Street has led many people to raise questions about the future of the energy industry and particularly that of the oil industry. Is George Soros seeing a further decline ahead in the oil industry? Is he seeing activity that many investors still have not realized? Soros likes to think of investing as a speculative game, where you need to analyze the behavior of how people will react to certain events and happenings. So lets take a look at the situation of oil prices in the world and the future of oil companies such as Chesapeake Energy.
Oil prices continue to be very volatile. A recent agreement by Russia and Saudi Arabia to cut down on oil production helped oil prices regain some footing. However that was spoiled less than a week later by the Islamic Republic of Iran. The country decided it would punish Saudi Arabia and other gulf countries that opposed its nuclear deal by flooding the markets with oil. As a result of Iran’s action, oil prices have taken another hit and have dropped once again, despite efforts of gulf countries like Saudi Arabia and Russia to try and stabilize oil prices.
The latest World Bank report has forecasted that the price of a barrel of oil will be even lower than expected. Last years forecast placed the price of a barrel of oil around $51, while the latest forecast has project it to be at around $37. This forecast by the World Bank further dims the prospects of investing in oil or energy companies that produce oil. Adding to the already dismal prospect of oil and energy companies are Baker Hughes Rig Counts which continue to show a decreasing amount of oil rigs in production. According to Baker Hughes Rig count data, the number of oil rigs in operation has dropped for 9 consecutive weeks. Given such forecasts and projections in the oil industry and the prices of oil, it is no surprise that George Soros has sold his shares in oil companies like Chevron. It makes perfect sense if you think of it. For more on the oil industry and George Soros’ reaction check out the following article on The Street.
George Soros is the founder and president of Soros Fund Management. It is one of the leading Wall Street hedge funds for many decades now. Soros is considered to be one of the most wealthiest people in the entire world with a total net worth estimated to be around $24 billion dollars. He made more than a billion dollars in one day by guessing correctly that the Bank of England would devaluate the British pound. Soros has also established the Open Society Foundation to help developing economies shift to free markets.