Billionaire investor George Soros reportedly has increased what so far has been a losing bet on the U.S. stock market.
He added bearish options plays to his portfolio during the first quarter, CNBC reported, citing recent Soros filings with the Securities and Exchange Commission.
“His two primary plays — against large caps via the S&P 500 and small caps via the Russell 2000 — have a notional, or potential, value of $764.3 million, according to an analysis from S&P Global Market Intelligence,” during the first three months of the year, CNBC reported.
“They continue a trend he began in 2016 of betting against the market, moves that haven't worked out well considering the latest leg in the bull market. The S&P 500 is up 5.7 percent this year while the Russell 2000 is up fractionally at 0.3 percent,” CNBC reported.
The quarterly disclosures of manager stock holdings, in what are known as 13F filings with the SEC, are always intriguing for investors trying to divine a pattern in what savvy traders are selling and buying, Reuters explained.
But relying on the filings to develop an investment strategy comes with some peril because the disclosures are backward looking and come out 45 days after the end of each quarter.
Still, the filings offer a glimpse into what hedge fund managers saw as opportunities to make money on the long side. The filings don't disclose short positions, bets that a stock will fall in price. And there is little disclosure on bonds and other securities that do not trade on exchanges.
Upon request, the SEC also permits managers to omit sensitive stock positions from 13F filings. As a result, the public filings do not always present a complete picture of a manager's stock holdings.
As of the end of the quarter, Soros held 3.3 million shares of the iShares Russell 2000 exchange-traded fund puts, an increase of 36 percent from the previous quarter and carrying a notional value of $459.6 million.
He increased his holdings of SPDR S&P 500 puts by 162 percent from the fourth quarter to 1.3 million shares, carrying a notional value of $304.7 million.
A put option is an option contract giving the owner the right, but not the obligation, to sell a specified amount of an underlying security at a specified price within a specified time, Investopedia explains. This is the opposite of a call option, which gives the holder the right to buy shares.
Meanwhile, Soros Fund Management LLC, founded by the billionaire investor, also boosted the firm's share stake in Goldman Sachs Group Inc. by nearly 40 percent during the first quarter and also purchased shares in Snap Inc, parent of the wildly popular Snapchat messaging app, Reuters reported.
Soros increased its stake in Goldman Sachs to 86,800 shares, as financials came under severe selling pressure during the first quarter. It purchased a stake of 1.7 million class A shares in Snap. Snap jumped 8 percent on Monday, accelerating its rebound in the second strongest day since its initial public offering in early March.
Soros Fund Management lifted its stake in Facebook Inc. by 80.4 percent to 638,086 class A shares, while increasing its stake in American Airlines Group Inc. to 116,950 shares and more than tripling its stake in Microsoft Corp. to 12,800 shares.
Soros Fund Management increased its share stake in Hewlett Packard Enterprise Co. from 1.1 million shares to 3.2 million shares, the filings showed.
Soros Fund Management also took a stake of 233,500 shares in Activision Blizzard Inc., while purchasing a new stake of 32,100 shares in Chesapeake Energy Corp.
Soros also took a stake of 29,600 shares in Twitter Inc. and a new stake of 14,300 class A shares in Visa Inc.
(Newsmax wire services contributed to this report).