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Billionaire Ray Dalio doubled his bet against European stocks.  Here’s why.

Ray Dalio is in the spotlight after his hedge fund, Bridgewater Associates, revealed that 28 European companies were missing $10.5 billion. The fund manager nearly doubled its $5.7 billion short position in 18 European companies last week. Of the 28 companies it tracks, all are part of the Euro Stoxx 50 index. The index tracks the major blue-chip stocks in the Eurozone.

Bridgewater is the world’s largest hedge fund with over $24 billion in 13F securities under management in the first quarter. According wisdom of whales, Bridgewater has total assets under management of $235 billion. Additionally, the fund has an average holding period of 4.2 quarters and a top 10 holding concentration of 33.9%.

Meanwhile, Dalio ranks 71st on Forbes’ List of billionaires with a net worth of $22 billion. The fund manager enjoys being involved in philanthropic activities and has donated approximately $1 billion in his lifetime.

Ray Dalio doubles his European short position

Dalio probably thinks Europe will soon enter a recession. Bloomberg reports that European economic expansion is stalling due to rising prices and inflation. In addition, Germany warned that high gas prices could lead to a collapse in the energy market. Russia is Germany’s biggest supplier and supplied the country with 32% of its gas last December. The Russian invasion of Ukraine has exacerbated economic tensions between the two countries.

Most European regulators only require disclosure for short positions that represent half a percent or more of a company’s shares. Therefore, it is possible that Dalio has additional short positions that fall below the threshold. Short positions in Dalio’s portfolio include ASML (NASDAQ:ASML), SAP (NYSE:SAP) and Adidas (OTCMKTS:ADDYY).

Sussex Partners co-founder Patrick Ghali gave his take on Bridgewater’s short positions:

“Given deteriorating fundamentals and high inflation, I’m not surprised they think this could be the start rather than the end of the correction.”

Additionally, Bridgewater is now Europe’s largest short seller. However, it is not entirely clear whether the shorts are intended to generate profits or act as a hedge. Still, the hedge fund’s short positions are the largest since 2020, when it bet $14 billion against European companies. In an interview last week, Dalio said he buys assets that offer inflation protection while avoiding debt assets and countries experiencing “internal conflict or international war”.

At the date of publication, Eddie Pan did not hold (neither directly nor indirectly) any position in the securities mentioned in this article. The opinions expressed in this article are those of the author, subject to Publication guidelines.


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