George Soros makes leftfield play for Manchester United

The billionaire investor has acquired a 1.9% stake in Manchester United football club, buying up 3.1 million Class A shares. He must be one hell of a Van Persie fan.

by Rebecca Burn-Callander
Last Updated: 19 Aug 2013
George Soros has bought up 1.9% of Manchester United, according to a recent filing with the US Securities and Exchange Commission. That's 8% of all the shares floated - quite a substantial slice of Red Devil pie. He spent over $40m on the deal, which would be a significant investment for most but is just a drop in Soros’ existing $25bn asset portfolio.
This is an interesting punt, given that Manchester United’s share price has been steadily sinking since the August listing. Last night, the company’s stock closed at $13.06, down 6.7% since the IPO.
So what does hedge fund legend and financial maverick Soros see in Manchester United? Well, it looks like the Glazers can rest easy - it's unlikely that he's trying to muscle in on their action. Firstly, he’s not a ‘hostile takeover’ kind of guy (although, conversely, he did consider a takeover of debt-ridden Italian club AS Roma back in 2008). Secondly, the Glazers have constraints in place to stop that happening. Their Class B shares have ten times the voting power of the publically traded shares. This is part of the reason investors have been somewhat thin on the ground.
Soros isn’t in it for the divis either: Class As pay out no dividends, which has also been a bit of a turn off for investors. These are the ‘No Frills' variety of shares: you buy them and hope they go up in value. Soros could be doing just that if he believes the club is undervalued.
He might have a point too. There are some seriously lucrative media deals in the pipeline. The English Premier League’s media rights are growing fast, with a 70% increase forecast for the 2013-2014 season. And Soros has made a nice early play, just in time to reap the benefits of the international rights announcement in late October too.
Or, perhaps given his hedge fund roots, he’s shorting the shares – betting on them losing value. In which case, this is a pretty complex financial transaction, involving other share borrowers/lenders. But complicated doesn't necessarily mean implausible. Manchester United did just lose their first Premier League game of the season on Monday against Everton after all. While the signing of Arsenal star striker Robin van Persie is a coup for the club, one man does not a team make.
Investors will be watching Soros like a hawk over the next few weeks. If he bets against Manchester United, it could be bad news for the club. Lest we forget, this is the man who nearly sunk the pound single-handedly in 1992, selling short $10bn of British sterling. Much will rest on Manchester United's next match. The team plays Fulham on Saturday and a win could do a lot for investor confidence. No pressure then, RVP...

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