Ray Dalio is in the spotlight after his hedge fund, Bridgewater Associates, disclosed that it is short $10.5 billion worth in 28 European companies. The fund manager nearly doubled his short position from $5.7 billion in 18 European companies from last week. Of the 28 companies that he is short, all of them are part of the Euro Stoxx 50 Index. The index tracks leading blue-chip stocks in the Eurozone.
Bridgewater is the largest hedge fund in the world with over $24 billion in managed 13F securities as of the first quarter. According to WhaleWisdom, Bridgewater has total assets under management of $235 billion. Furthermore, the fund has an average holding period of 4.2 quarters and a top 10 holdings concentration of 33.9%.
Meanwhile, Dalio ranks at number 71 on Forbes’ Billionaire list with a net worth of $22 billion. The fund manager enjoys participating in philanthropic activities and has donated about $1 billion in his lifetime.
Ray Dalio Doubles Down on European Short Position
Dalio likely believes Europe will enter into a recession soon. Bloomberg reports European economic expansion is stalling due to higher prices and inflation. In addition, Germany has warned that high gas prices could result in an energy market collapse. Russia is Germany’s top supplier and provided the country with 32% of its gas last December. The Russian invasion of Ukraine has exasperated economic tensions between the two countries.
Most European regulators only require disclosures for short positions that make up half a percent or more of a company’s shares. As a result, it is possible Dalio has additional short positions that fall below the threshold. The 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 the deterioration in fundamentals and high inflation I am not surprised that they feel that this may be the beginning rather than the end of the correction.”
Additionally, Bridgewater is now the largest European short seller. However, it’s not entirely clear whether the shorts are intended to generate profit or act as a hedge. Still, the hedge fund’s short positions are its largest since 2020 when it bet $14 billion against European companies. In an interview last week, Dalio stated he is buying assets that offer protection against inflation while avoiding debt assets and countries with “domestic strife or international war.”
On the date of publication, Eddie Pan did not hold (either directly or indirectly) any positions in the securities mentioned in this article. The opinions expressed in this article are those of the writer, subject to the InvestorPlace.com Publishing Guidelines.
