Bridgewater Associates, the world’s biggest hedge fund, has walked back from its big bet against Europe, slashing its short positions to $845M from as much as $10.5B, Bloomberg reported Wednesday, citing data it compiled from regulatory filings.
Ray Dalio’s company still has short positions against three European companies — Banco Santander (SAN), Air Liquide (OTCPK:AIQUF) (OTCPK:AIQUY), and ING Groep (ING), according to Bloomberg — compared with as many as 28 earlier.
I am surprised at SAN being one of his short picks, as there are several worse banks in Europe, Cr Suisse, Deutsche, Commerzbank, to name just 3 without even looking at Italy.
Jim, you had written about SAN a few times as one of the more attractive banks in Europe. They seem to be very cheap on a few metrics like PE of 5 and PB of 0.47. Of course a recession could result in rise in non performing loans and write offs. Maybe their reserves are inadequate. Your thoughts?
Bridgewater doesn’t have analysts doing deep dives on specific companies. They form a macro view and express their macro view through indices/fx and in this case a basket of stocks.
Jim, you had written about SAN a few times as one of the more attractive banks in Europe. They seem to be very cheap on a few metrics like PE of 5 and PB of 0.47. Of course a recession could result in rise in non performing loans and write offs. Maybe their reserves are inadequate. Your thoughts?
I guess I think of them as one of the better houses in a very bad neighbourhood, being European banks.
Partly because they aren’t really a European bank, as their operations are so diversified geographically.
They do tend to make money through thick and thin, but I bailed on them some years ago when I got disillusioned with their habit of dilution.
10bn shares outstanding a decade ago, over 18bn now.
Top line and bottom line progress don’t matter much if the holder of a share doesn’t benefit.
I made a few bucks and said farewell. Far easier ways to make a buck.
A bigger mystery to me is the lack of good things from Handelsbanken stock (SVNLY in the US), which seemed to be an extraordinarily well run bank.
Measured in US dollars the price has been falling, off and on, for the last eight years as the P/E has fallen from 15 to 7.
Probably still a better bet than Santander, unless their long history of good management has entirely disappeared.