Zero Hedge — Bloomberg reports Soros Fund Management took a short position in Deutsche Bank AG of about 7 million shares, or a total notional of about $100 million, as turmoil from the U.K.’s decision to leave the European Union sent bank stocks lower. The position taken on Friday was equivalent to 0.51 percent of Deutsche Bank’s share capital, according to a German filing published on Monday. The document doesn’t show at which price the fund took the position.
Deutsche Bank shares fell 16% at the open on Friday and closed down 14 percent at 13.37 euros. Their highest price that day was 13.95 euros. At that level, a 0.51 percent stake would be worth about 98 million euros. After extending losses on Monday, the shares were trading 4.5 percent higher at 10 a.m. Tuesday in Frankfurt.
In other words, Soros’ Op-Ed which was subtitled “The Brexit crash will make all of you poorer – be warned”, should have added that “it will also make me richer via my Deutsche Bank short.”
Soros was not the only one who hedged. As Reuters reported overnight, Stanley Druckenmiller’s Duquesne Family Office LLC was long gold futures ahead of last week’s vote in Britain to leave the European Union, a source familiar with the matter said on Monday.
Gold soared on Friday in its best day since 2009, hitting two-year highs as uncertainty after Britain’s vote to leave the European Union pushed investors to sell equities and seek safer assets. The size of the trade was not known.
The trades by Soros Fund Management and Marshall Wace came as hedge funds rushed to take advantage of the volatility provoked by Britain’s shock decision to leave the EU, with some of the world’s biggest funds aggressively shorting the pound and British stocks in expectation of a sharp deterioration of the UK economy.
A spokesman for Mr Soros said on Monday that he had not bet against the pound before last Thursday’s vote, and had also not profited from its sharp fall since the result.
In short: while Brexit’s so-called “disastrous” impact on millions of common people has yet to be observed , a process which will take years, the billionaires once again won.
What is ‘Short Selling’? (Shorting)
Short selling is the sale of a security that is not owned by the seller, or that the seller has borrowed. Short selling is motivated by the belief that a security’s price will decline, enabling it to be bought back at a lower price to make a profit. Short selling may be prompted by speculation, or by the desire to hedge the downside risk of a long position in the same security or a related one. Since the risk of loss on a short sale is theoretically infinite, short selling should only be used by experienced traders who are familiar with its risks.
A ‘long’ is the buying of a security such as a stock, commodity or currency at full value with the expectation the asset will rise.
