Famous global macro hedge fund manager Paul Tudor Jones, the founder of Tudor Investment Corp, doubled-down on his bet against the stock market, according to his fund’s most recent 13-F filing.
During the second quarter, Tudor Investment bought put options on over 5.95 million shares of the SPDR S&P 500 ETF (SPY). The fund now owns puts on 8.34 million shares of the exchange-traded fund, making it the fund’s largest position, the filing shows.
Puts gain value when the price of an asset falls. Buying these SPY puts gives the fund the right, but not the obligation, to sell shares at a set price. If the S&P 500 or the ETF that it tracks falls, Tudor Investment should profit handsomely as it would effectively be able to buy at a low price and then sell at the put’s price.
Tudor Investment also owns call options on just over 1.43 million shares of the SPDR S&P 500 ETF. The fund added call options on approximately 420,700 more shares during the second quarter, the filing shows. Calls give the fund the right to buy at a certain set price.
Jones, who is famous for nailing the “Black Monday” October 1987 stock market crash, is not alone in his bet against the S&P.
Jones joined George Soros
Legendary hedge fund manager George Soros also doubled down on his bet against the S&P, buying put options on just over 1.9 million shares the SPDR S&P 500 ETF, making it so he owns puts on just over 4 million shares. It’s his fund’s biggest holding in the filing too.
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 23rd Brexit vote, Soros had warned that a decision to leave the EU 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 where he highlighted these concerns.
Soros 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.”
Markets initially sold off following the UK’s stunning decision to leave the EU. However, 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.