Who Is George Soros?
With a net worth of 8.3 billion in May 2020, this Hungarian American Investor and Hedge Fund Manager is one of the richest people in the world. His greatest impact on the markets earned him the striking title of “The Man that Broke the Bank of England” as well as “Most Generous Giver”. So how did this 90+ year old get labeled with these titles? Let’s find out.
Soros' Story
Background
Soros’s roots come from Budapest, Hungary with a Jewish background. Fearing that their background would cause problems for them in the future, his original surname Schwartz was changed to Soros by his father to protect their family. His father was right in that when the Nazis occupied the country, it allowed Soros and many others to flee from Hungary.
He fled to England in 1947 where he got enrolled at the London School of Economics. He earned a doctorate during his time there.
Career
F.M. Mayer
He moved to the US in 1956 where he pursued a career at F.M. Mayer as an arbitrage trader. An arbitrage is where you buy and sell an asset at the same time but from different markets. By doing this you exploit the market’s inefficiencies in their tiny price differences. During this 4 year period, he specialized in European Stocks.
Quantum Fund
Soros founded his own investment management company called Soros Fund Management in 1970 which he later changed the name to Quantum Fund a few years later in 1978. Over a ten year period, the fund increased in value by 4200% surpassing the S&P 500 at 47%. By 2013, it became the most successful hedge fund ever making 5.5 billion and in its lifetime, a total of 40 billion.
“The Man that Broke the Bank of England”
The most significant event in his career is when he made 1 Billion dollars on a single day. He did this by shorting the British Pound on September 16 1992 otherwise known as ‘Black Wednesday’. This was when European Exchange Rate Mechanism was taking effect. An agreement for several European countries to fix their exchange rate. Britain had the choice of leaving the agreement or joining it which would however devalue its currency.
Soros secured a 10 billion short position using leverage on the British pound. When Britain floated its currency, the value dropped and this earned him 1 billion. This is when Soros earned the title ‘the man that broke the Bank of England’ and is perhaps one of the best trades of all time. In November 1992, He was able to replicate this again on the Swedish Krona gaining another 1 billion.
“Most Generous Giver”
According to Forbes he was given this title as he has donated 64% of his fortunes. This comes to about 32 billion to his own Open Society Foundation. They value supporting civil society groups in education, public health and justice. This makes Soros one of the biggest donors percentage wise among billionaires.