George Soros’s family hedge fund, Soros Fund Management, on Wednesday filed its 13F quarterly report -- and it appears the billionaire market speculator has made some interesting bets.
As the filing indicates, Soros biggest position in the second quarter was a “put” on the S&P 500 ETF (exchange traded fund).
A “put” is defined as follows [via Investopedia]: “An option contract giving the owner the right, but not the obligation, to sell a specified amount of an underlying asset at a set price within a specified time.”
And here’s the important part: “The buyer of a put option estimates that the underlying asset will drop below the exercise price before the expiration date.”
Soros in Q2 bought a put on 1,248,643 SPY units (“SPY,” also known as “SPDR” or “spiders,” is an abbreviation for a Standard & Poor's depositary receipt. “Each share of spider contains one-tenth of the S&P index and trades at roughly one-tenth of the dollar-value level of the S&P 500,” Investopedia explains).
The 13F filing also show that Soros is hot for Apple stocks and not all that interested in Citigroup or Netflix stocks -- and he’s definitely not interested in gold.
Business Insider’s Julia Roche notes the infamous Democrat bankroller in Q2 held 26,157 shares of SPDR S&P 500 and call options on 143,600 shares and put options on 7,802,400 shares in the ETF.
Now compare this to the first quarter when Soros held 17,065 shares and puts on 2,618,700 shares of SPDR S&P 500 ETF:
Okay, so what does this matter?
Well, as mentioned in the above, a “put” is is basically a bearish or -- as Roche puts it -- a “downward” bet.
“It appears that Soros has placed a large bet through S&P 500 puts, basically giving him the right, but not the obligation, to sell them in the future,” she writes.
Translation: If the S&P 500 and/or the exchange traded fund which tracks the S&P tanks, Soros will profit -- and he’ll profit big.
However, recall that the “man who broke the bank of England” also purchased a large amount of stock in Apple. So maybe he's just be hedging.
Lastly, keep in mind Roche’s final thought: “13F filings come 45 days after the end of the quarter. Fund managers only have to disclose their long equity holdings in these 13Fs. We don't know what he's shorting.”
In short, Soros’ “put” could be something ingenious or it could be him acting on a hunch.
As Soros himself once said: “Markets are constantly in a state of uncertainty and flux, and money is made by discounting the obvious and betting on the unexpected.”
Here’s the complete 13F filing:
Follow Becket Adams (@BecketAdams) on Twitter
Featured image Getty Images.