Elliott Management is a New York-based investment fund founded in 1977 by American billionaire and activist investor Paul Singer. As of September 30, Elliott’s 13F portfolio had a total worth of over $12.25 billion. Paul Singer shared a gloomy future of the global economy in his third quarter letter to investors. Mr. Singer thinks economic policies in the developed world are “unsound” and “marching in the wrong direction”, which could result in a stock market crash and high inflation. Given that Elliott management is up 8.4% year to date through September, let’s take a closer look at some of the most important bearish calls by Elliott in the third quarter.
Vanguard REIT Index Fund (NYSEARCA:VNQ)
Elliott Management reported having a 4.31 million shares PUT option on Vanguard REIT Index Fund (NYSEARCA:VNQ). The total value of this position is $374.16 million. Real estate investment trusts and bonds have plummeted after the election of Donald Trump, amid fears that the new government’s policies will cause an increase in budget deficit and inflation, resulting in high bond yields. Chances of an impending rate hike are also weighing in on the sector. In a recent letter to investors, Elliott Management warned that they are “concerned” about the expected high inflation, which will result in the collapse of bond prices.
SPDR S&P Oil & Gas Explore & Prod. (ETF) (NYSEARCA:XOP)
Elliott Management added a new PUT option for SPDR S&P Oil & Gas Explore & Prod. (ETF) (NYSEARCA:XOP) in its portfolio in the third quarter with a total of 9,500,000 shares of the oil and gas ETF. The total worth of this position is about $365.37 million. Oil and gas prices have rallied after OPEC agreed to cut oil production. There is also hope that Russia and other non-OPEC countries might join along.