George Soros's investment firm is betting on Trump to fail as it takes on new holdings which could benefit from a downturn

 
Lucy White
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George Soros doubts that President Trump will be good for America's stock market (Source: Getty)

Soros Fund Management, the investment management firm founded by prominent Democratic Party donor George Soros, appears from its latest filings to be betting on US President Trump to fail.

The firm has recently taken up put options on PowerShares QQQ Trust, SPDR S&P 500 ETF and iShares Russell 2000 Index Fund, it was revealed in filings with the US Securities and Exchange Commission (SEC).

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Each of these is an exchange traded fund (ETF) which tracks a broad US stock market index – the Nasdaq 100, S&P 500 and Russell 2000 respectively. A put option, which gives the owner a right to sell the security at a specified price in the future, increases in value as the price of the underlying stock depreciates.

Soros has previously expressed his fears that Trump could do something to cause a stock market upset. In January, at his annual media dinner at the World Economic Forum in Davos, Soros said that “it's impossible to predict exactly how Trump is going to act" but he was “convinced that he is going to fail”.

Together, the three sets of put options come to $1.79bn (£1.38bn). They are three of the four largest disclosures on the SEC filing, and the PowerShares QQQ Trust puts now comprise 17.92 per cent of the Soros Fund Management portfolio.

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However, Soros Fund Management does appear to be hedging its bets. The SEC filing also reveals that the firm has taken an admittedly much smaller call option on SPDR S&P 500 ETF, worth $49.81m, which works in the opposite way to the put option and could balance it.

The call option gives the right to buy shares in the future at a set price, and the call option's value increases as the price of the underlying stock appreciates.

Added to that, the firm had actually decreased its put options on the iShares Russell 2000 Index Fund by 24 per cent since the previous SEC filing.

Meanwhile, Soros Fund Management has dissolved its stake in Hewlett Packard Enterprise, Tesla, Pfizer and ConocoPhillips, and has cut its stake in Facebook and Microsoft.

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