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MARKETS LIVE BLOG:

STOCKS CLIMB AS DOW POSTS 8TH STRAIGHT WIN

Fed's Michelle Bowman echoes higher-for-longer mantra for interest rates

Hedge fund giants have cut their bets on gold

Julia La Roche
gold
(Image: Wikimedia Commons)

A number of big-name hedge fund managers have cut back their bets on gold during the second quarter.

Prominent hedge fund manager Stanley Druckenmiller, who now runs Duquesne Capital as a family-office hedge fund, closed his entire position in the SPDR Gold Trust ETF (GLD), which had been his fund’s biggest allocation.

Druckenmiller, who bought GLD in the form of call options in the third quarter of 2015, has been critical about the efficacy of central bank policy. Eight years after the financial crisis, interest rates are at or near zero, and in some parts of the world they’re negative yielding.

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Speaking at the Sohn Conference in May, Druckenmiller hinted at owning gold without giving any explicit recommendations.

Shares of the SPDR Gold ETF have risen 26% in 2016.

Stanley Druckenmiller closed his position on the SPDR Gold ETF, which had been his fund's largest allocation.
Stanley Druckenmiller closed his position on GLD, which had been his fund’s largest allocation.

Druckenmiller still owns just over 1.82 million shares of Barrick Gold (ABX), a position he opened in the first quarter of 2016. Shares of Barrick Gold have soared 198% in the first half of 2016.

Meanwhile, George Soros, the legendary hedge fund manager who runs his name-sake family-office Soros Fund Management, also closed a position on the SPDR Gold ETF that he had bought in the first quarter in the form of call options on 1,050,000 shares, the filing shows.

That said, during the second quarter, Soros did buy 240,000 shares of the SPDR Gold ETF, a position valued at $30,365,000 at the end of the second quarter, the filing shows.

Soros also massively pared back his stake in Barrick Gold, selling 18,348,235 shares in the second quarter. He last held 1,071,074 million shares of Barrick Gold, a position worth just over $22.8 million at the end of the quarter. Soros had been invested in Barrick Gold since the first quarter of 2016.

gold
GLD gain 20% in the past year, significantly outperforming the S&P 500.

Elsewhere, Soros has doubled down on his bearish bet against the S&P 500 by adding put options — which are used for a downside bet — on 1.9 million shares of the SPDR S&P 500 ETF.

Billionaire John Paulson, the founder of Paulson & Co. who famously bet against subprime, trimmed some of his gold stocks.

Paulson sold 2,402,300 shares, or about 15%, of AngloGold Ashanti (AU), a stock he’s been invested in since 2009. He last held just over 12.8 million shares of AngloGold Ashanti, the filing shows.

During the second quarter, Paulson also sold 9,810,661 shares of Novagold Resources (NG), a stock he’s been in since the first quarter of 2010. He last held just over 25.7 million shares of Novagold, a position valued at just north of $157.3 million at the end of the second quarter.

Paulson made no changes to his positions in the SPDR Gold Trust ETF, IAMGOLD Corp (IAG), or Randgold Resources (GOLD).

John Burbank III, founder and CIO of Passport Capital, speaks on a panel at the annual Skybridge Alternatives Conference (SALT) in Las Vegas May 7, 2015. REUTERS/Rick Wilking
John Burbank III, founder and CIO of Passport Capital

Elsewhere, closely-followed macro fund manager John H. Burbank III, the founder of $4 billion Passport Capital, bought put options on 4 million shares of the SPDR Gold ETF.

Puts are used for a downside bet. Buying puts, basically gives Burbank the right, but not the obligation, to sell them in the future. In other words, if gold prices fall or SPDR Gold ETF falls, Burbank should make a nice profit.

In the second quarter, Burbank sold his fund’s 30,000 shares of the SPDR Gold ETF, a position he took in the first quarter.

Gold prices are up about 27% this year.

As a reminder, hedge funds of a certain size are required to disclose their long stock holdings in filings known as 13-Fs. Of course, the filings only provide a partial picture since they do not show short positions or wagers on commodities, currencies, or fixed income. What’s more is these filings come out 45 days after the end of each quarter, so it’s possible they could have traded in and out of the position. Still, it does provide a glimpse into where some of the top money managers have been placing money in the stock market.

Julia La Roche is a finance reporter at Yahoo Finance.

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