It's Dalio Versus Everyone Else as Money Flows to Europe

Updated on
  • Bridgewater’s $18.45 billion short dwarfs other hedge funds’
  • Bet is ‘out of consensus’ as European companies show growth

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Billionaire Ray Dalio has $18.45 billion in bets against Europe’s biggest stocks. Most of the rest of the investing world is headed in the other direction.

U.S. stocks lost $9.7 billion in investment so far this month while Eurozone shares have gained $3.2 billion, according to data compiled by Bloomberg. Peers of Dalio’s firm, Bridgewater Associates, are mostly wagering that Eurozone equities will rise.

Ray Dalio

Photographer: Jason Alden/Bloomberg

“I’m surprised. That’s a big bet. Dalio and his team are very confident,” said Rick Herman, managing director of asset allocation who helps oversee about $30 billion at BB&T Institutional Investment Advisors Inc. “That’s definitely out of consensus. European stocks are cheaper, and they also have stronger earnings growth.”

Dalio has always marched to the beat of his own drummer, so his big short position, especially when other hedge funds are betting in the opposite direction, could be seen in that context.

Only clients and Bridgewater executives are privy to the firm’s full range of investments. The Westport, Connecticut-based hedge-fund manager may have opened long positions that it has not had to disclose in regulatory filings. It also may have purchased call options or used other derivatives to make sure it benefits from positive developments in the Eurozone. Bridgewater declined to comment.

But even among those who are short, Bridgewater stands out, according to a Bloomberg survey of hedge funds. The combined value of their shorts stands at $23 billion. Dalio’s position has decreased from $22 billion on Feb. 15 but is still a whopping 43 percent larger than the outstanding bets by Cliff Asness’s AQR Capital Management.

Above the Rest

Value of Bridgewater's short positions dwarfs those of its contemporaries

Source: Bloomberg

Note: Citadel is combined value of Citadel Advisors and Citadel Europe

One Eurozone stock is popular with big U.S. hedge funds. Paul Singer’s Elliott Management Corp., San Francisco-based Farallon Capital Management and Dan Och’s Och-Ziff Capital Management Group LLC are all investors in NXP Semiconductors NV, based in the Netherlands. Qualcomm Inc. is trying to buy the company. Shares are up more than 6 percent since the beginning of the year.

— With assistance by Saijel Kishan, Lu Wang, and Katia Porzecanski

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