Thursday, August 15, 2013

Soros Fund Bets On Lower Stock Market (SPY Puts)

Ever since the famous "ultimate bubble" quote (when talking about Gold), Soros seems to be the one fund manager always making headlines as he changes his position in GLD (a physically backed ETF).

Today was no exception with the latest 13F (to June 30) showing the fund sold it's entire stake in GLD as reported by MarketWatch, Bloomberg and no doubt others to come. Not only did the Soros Fund sell the entire stake in GLD, but also the entire stake in GDX (Gold Miner ETF) and GDXJ Calls (Junior Gold Miner ETF Options). The position in GDX was actually a larger percentage of the portfolio than GLD at the start of the reporting period. The fund retained a small position in GDXJ.

For those that hold Soros' opinion in high regard and follow in his footsteps, you would do well to be careful where you put the funds once you've sold your Gold...

What isn't yet making headlines (and probably won't on mainstream finance news sites) is that the largest position the fund now holds is SPY Puts, basically a short term bet that the stock market is headed lower (although we don't know the exact structure of target dates and prices). The position (SPY Puts) relative to the total size of the fund increased from 1.28% to 4.79% over Q1 (more than tripled) and has increased to 13.54% over Q2 (almost tripled again).

Soros reportedly made $1 billion betting against the British Pound in 1992. We heard rumours of Soros making a $1 billion bet against the AUD (a position that has done well if true). We heard when he made $1 billion betting against the Yen. Where are the headlines for his $1.25 billion bet against the stock market?

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