Hedge fund Bridgewater makes $22 bln bet against European firms

Envair Electrodyne

14/02/2018 18:00

* Top global hedge fund shows hand on European firms 
    * Bridgewater founder cautioned of global confidence swing 
    * Short positions in Germany, France hit $12 billion 
 
    By John O'Donnell, Maiya Keidan and Lawrence Delevingne 
    LONDON/FRANKFURT/NEW YORK, Feb 14 (Reuters) - Bridgewater 
has shown its hand in Europe with a $22 billion bet against some 
of the continent's biggest companies, filings reviewed by 
Reuters show, part of a bigger shift by the world's largest 
hedge fund manager. 
    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 Bridgewater had reduced that long exposure significantly 
this year, the investor added. 
    Bridgewater, which declined to comment on its trading, bets 
on macro-economic events and has $160 billion under management.  
    Unlike the United States, where hedge funds are not required 
to disclose short positions, European rules brought in as a 
result of the financial crisis require publication once they go 
above a certain threshold. 
    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 filings do not say when Bridgewater first took 
out its European short positions, many of its above-threshold 
disclosures are recent, with some in Germany, Italy and France 
in the past two weeks.  L8N1Q43EF  
    Bridgewater's billionaire founder Ray Dalio spoke last month 
of the end of a buoyant global investment market. 
    "It just takes a little change in interest rates to have a 
bear market," he told CNBC at the World Economic Forum, adding 
the late part of the cycle may still have quite a way to run. 
    But in a post on Linkedin this week, he wrote: "Recent 
spurts in stimulations, growth, and wage numbers signalled that 
the cycle is a bit ahead of where I thought it was." 
     
    CHEAP HEDGE?  
    The European filings show Bridgestone has bet against firms 
ranging from Anglo-Dutch consumer giant Unilever  ULVR.L  to 
French oil group Total  TOTF.PA , and from Deutsche Bank and 
German industrial group Siemens  SIEGn.DE  to Italian bank 
Intesa  ISP.MI . 
    The group's short positions have emerged piecemeal in a 
series of filings that were made public throughout January and 
February, although Bridgewater will likely have built up its 
trades in advance of those announcements. 
    Bridgewater is not known for picking individual stocks and 
James Helliwell, chief investment strategist and director of the 
Lex van Dam Trading Academy, said he thought the manager's 
position was the result of a view on the wider economy.  
    "Whilst the extent to which it may be an outright short bet 
is uncertain, I suspect that it was seen as a relatively cheap 
hedge against existing global equity exposure." 
    A London-based equity sales trader at a large U.S. bank said 
the shorts could just be a bet on fund outflows as volatility 
increases - which could explain why there are fewer Bridgewater 
shorts on the UK market - as UK stocks are very under-owned. 
    Bridgewater's short positions amount to more than $4.5 
billion in France and top $7.3 billion in Germany, while in 
Spain its shorts in four groups amount to almost 1.4 billion 
euros ($1.7 billion) and in Italy include Unicredit  CRDI.MI  
and Enel  ENEL.MI . 
    Stock markets, after years of steady increases, wobbled last 
week amid concern that central banks, which have printed money 
and cut interest rates to bolster economic activity following 
the financial crisis, will pare back their support. 
    Bridgewater's portfolio is fluid and it has been adjusting 
its trades, cutting back on shorts in the Netherlands, Spain and 
Ireland, while increasing them in Germany and Italy, the data 
reviewed by Reuters shows. 
    Bridgewater is not alone in its cautious stance, with BG 
Master Fund, based in Dublin, last week disclosing a 0.4 percent 
short position against German lender Commerzbank, while 
London-based Marshall Wace has made similar bets across Europe. 
($1 = 0.8097 euros)    
 
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FACTBOX - Bridgewater's $22 billion short bet against Europe    
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 (Additional reporting by Simon Jessop, Alasdair Pal, Tricia 
Wright and Helen Reid in London, Danilo Masoni in Milan, Tom 
Sims in Frankfurt and Lawrence Delevingne in New York; writing 
by John O'Donnell; editing by Alexander Smith) 
 ((john.odonnell@thomsonreuters.com; +49 69 7565 1366; Reuters 
Messaging: john.odonnell.thomsonreuters.com@reuters.net)) 
 
Keywords: BRIDGEWATER EUROPE/