This week Bridgewater disclosed more than 70 reductions in their big EU shorts.
This is in contrast to the previous week when we uncovered more than €14b in bets against 43 major companies, seemingly somehow related to a major European index.
Almost all of the world's largest hedge fund EU short positions are still above 0.5% short interest, but have been somewhat reduced. For example, all five big short positions against Spanish companies have been cut, such as, shorts in BBVA, Banco Santander and Amadeus IT Group that went from 0.89% to 0.69% short interest.
Needless to say, observed on its own, these big European shorts resulted in big profits for Bridgewater. Major European index that we use a proxy for profit estimates of these big shorts was down as much as 29% since close on Friday, March 6th, prior to appearance of these negative bets.
It is unknown to us to which extent these disclosures may be an outright short bet, and to which extent a hedge against certain exposure. But these media articles, focusing on the recent performance, seem to shed more than enough of light on that: As reported by FT, Bridgewater's Pure Alpha and the more leverage fund, Pure Alpha II, declined 5.5% and more than 8%, respectively, in the first two months of 2020. Also, according to media, Pure Alpha Fund II declined further and is supposedly down about 20% through this past Thursday.
The only other occurrence of a short-selling of this magnitude by a single money manager, we are aware of, has also been by Bridgewater back in 2018.*
- As of close a week ago on Friday, March 13th, we estimated more than €14b of worth in these short bets. According to our calculations as of Friday, March 13th, seven of these big shorts had an estimated value of more than €500m, with the largest two closely approaching €1b mark:
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* Note: Presented short selling data is based on European net short position data which is disclosed to the public when short positions at least equal to 0.5% of company issued share capital. „Big short“ refers to a short position above 0.5% of company issued capital. Presented data and analytics is as of available on 2020-03-20 15:00h CET.
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