Tags: george soros | invest | bets | lost

Soros' Bearish Bets Have Lost $151 Million, So Far

Soros' Bearish Bets Have Lost $151 Million, So Far

By    |   Tuesday, 14 June 2016 07:04 AM


George Soros has maintained a short position in the S&P 500 since at least the first quarter of 2011. We know this from filings he makes with the Securities and Exchange Commission every quarter.

It’s likely Soros is using this position solely as a hedge rather than as a market timing bet. He makes changes to the position every quarter but always has exposure to the short side which is the traditional way to manage a hedge fund.

While headlines note the position of a sign of Soros’ bearishness, it hasn’t been a profitable bet. His S&P 500 put position shows a loss in 19 of the past 20 quarters. Overall, the losses add up to $151 million.

Simply knowing Soros always has this position open doesn’t tell us he’s bearish. But we can gauge insight into his thinking by how large the position is. At the end of March, the latest available data, Soros has a below average short position. The value of his puts was just 60 percent of his median position size. This was the second quarter in a row he had a smaller than average put trade open. That could mean he’s bullish.

Soros is one of the world’s greatest investors but he is managing a hedge fund designed to build wealth while hedging risks. To him, $151 million is a small cost of doing business to protect his $23 billion fortune.

On average, this position has cost him just 0.1 percent a year, a low cost for insurance. If the market crashes, he’ll make billions to offset losses in long positions and if it doesn’t he loses an amount that is meaningless to him.

The lesson for us as individual investors is not to believe that Soros is bearish when he buys puts. His strategies are complex and he can afford losses in some positions as part of those strategies.

Michael Carr, CMT, is a subadviser to a mutual fund family and a chartered market technician. To read more Michael Carr, CLICK HERE NOW.

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MichaelCarr
George Soros has maintained a short position in the S P 500 since at least the first quarter of 2011. We know this from filings he makes with the Securities and Exchange Commission every quarter.
george soros, invest, bets, lost
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2016-04-14
Tuesday, 14 June 2016 07:04 AM
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