Mr Cosovic said: “If it is indeed STOXX Europe 50 Index related, then they are most probably short the rest of the index as well, they just didn’t cross the threshold yet.”
Short positions describe when an investor borrows a share, sells it on the open market, and expects to buy it back later for less money. It is one of the ways in which hedge funds manage risk and protect their portfolios in a down market, when stocks depreciate in value.
It is not clear whether these recent transactions are part of a hedging strategy – to offset losses – or an opportunistic play to profit from expected declines.
In an interview with Italy’s La Repubblica newspaper this week, Dalio said Bridgewater is buying assets that offer protection against inflation, while steering clear of debt and countries at risk of domestic strife or war.
This is the third time that Bridgewater has shorted European equities in the past four years. The Connecticut-based hedge fund bet $22bn against European companies in February 2020, though this is thought to have been a hedge.
Then in March 2020, as the pandemic struck, Bridgewater revealed a $14bn (£11.4bn) bet against continental stocks, including a large position against Dutch chipmaker ASML Holding.
Bridgewater was contacted for comment.
