Monday, July 4, 2022

Bridgewater makes $22 billion bet against European firms

World’s largest hedge fund manager marks a major shift by making $22 billion bet against European firms

In a major shift, Bridgewater, world’s largest hedge fund manager has made $22 billion bet against European firms, filings show. It has made the bet against some of the continent’s biggest companies as part of a bigger shift by the hedge fund giant. Although data was not available to show whether Bridgewater holds more European stocks than it “shorts” overall, an investor in the hedge fund firm’s Pure Alpha Major Markets strategy said that its position was slightly net “long” on Feb. 6. But the investor added that Bridgewater had reduced that long exposure significantly this year.

Bridgewater declined to comment on its trading. Bridgewater bets on macro-economic events and has $160 billion under management.

However, in Europe, hedge funds rules differ from those in place in the United States. While in the United States, hedge funds are not required to disclose short positions, hedge funds in Europe require publication once they go above a certain threshold. The rules in Europe were introduced as a result of the financial crisis.

Short selling is a mainstay of hedge fund investing and is driven by expectations that shares will fall, which means they can later be repurchased at a lower price to make a profit.

Although the time when Bridgewater first took out its European short positions was not mentioned in the filings, many of its above-threshold disclosures are recent, with some in Germany, Italy and France in the past two weeks.

Last month, Bridgewater’s billionaire founder Ray Dalio spoke of the end of a buoyant global investment market. In an interview at the World Economic Forum, he said that it just takes a little change in interest rates to have a bear market, adding that the late part of the cycle may still have quite a way to run. But in a post on LinkedIn this week, he wrote that recent spurts in stimulations, growth, and wage numbers signalled that the cycle is a bit ahead of where he thought it was.


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