George Soros’ family-office hedge fund, Soros Fund Management, increased its bearish bet on the stock market.
During the second quarter, Soros bought put options on just over 1.9 million shares on the SPDR S&P 500 ETF (SPY), making it so he owns puts on just over 4 million shares of the exchange-traded fund. It’s his fund’s biggest holding in the filing too.
Puts are used for a downside bet. Buying these S&P 500 puts, essentially gives Soros the right, but not the obligation, to sell them in the future. In other words, if the S&P 500 or the ETF that tracks falls, Soros should make a nice profit.
Soros, 86, is widely-known as the man who “broke the Bank of England” following his short bet against the British Pound in 1992 while running the Quantum Fund alongside Stanley Druckenmiller. Ahead of the June 23 Brexit vote, Soros had warned that it would be more disruptive than “Black Wednesday.”
On June 30, the last day of the second quarter, Soros gave a grim speech to the EU Parliament.
In the speech, he warned that the Brexit may be a “greater calamity” than the refugee crisis. He added that the UK’s shocking decision has “unleashed a crisis in the financial markets comparable in severity only to that of 2007/8.”
He continued: “This has been unfolding in slow motion, but Brexit has accelerated it. It is likely to reinforce the deflationary trends that were already prevalent.”
While global markets sold off dramatically following the surprise decision by UK voters to leave the European Union, they have since rallied back. Stocks lately have been hitting all-time highs.
Hedge funds of a certain size are required to disclose their long stock holdings in filings known as 13-Fs. Of course, the filings only provide a partial picture since they do not show short positions or wagers on commodities and currencies. What’s more is these filings come out 45 days after the end of each quarter, so it’s possible they could have traded in and out of the position. Still, it does provide a glimpse into where some of the top money managers have been placing money in the stock market.
Julia La Roche is a finance reporter at Yahoo Finance.