Paul Singer’s Bearish Bets Against Apple (AAPL), Semiconductors, Oil, and More

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.

Related Read: 10 Most Expensive Countries in the World to Buy Real Estate

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.

VanEck Vectors Semiconductor ETF (SMH)

Paul Singer’s firm bought a 2.19 million share equivalent PUT option on VanEck Vectors Semiconductor ETF (SMH) in the third quarter for over $152.48 million. According to the Semiconductor Industry Association, semiconductor sales grew by 11.5% in the third quarter, reaching the highest quarterly sales total of $88.3 billion. VanEck tracks over 26 global securities on Semiconductor 25 Index. Its portfolio includes famous semiconductor giants including QUALCOMM, Inc. (NASDAQ:QCOM), Intel Corporation (NASDAQ:INTC), Broadcom, Texas Instruments and Taiwan Semiconductor.

Apple Inc. (NASDAQ:AAPL)

Elliot Management bought PUT options on Apple Inc. (NASDAQ:AAPL) in the third quarter, ending the period with $130.96 million worth of put shares of the company. Some bears think that Apple Inc. (NASDAQ:AAPL)’s stock is facing a slip in the demand of iPhones. Recently, Apple analyst Kuo claimed that Apple’s iPhone 7 demand may have peaked and might slow going forward amid the lack of “surprising” specs in the new phone. The company is now reportedly considering expanding into wearable glass headsets among its new iniatiaves. A total of 145 hedge funds tracked by Insider Monkey were bullish on Apple Inc. (NASDAQ:AAPL) at the end of the third quarter, up from 116 funds a quarter earlier.

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Cognizant Technology Solutions Corp (NASDAQ:CTSH)

Elliott Management bought PUT options on Cognizant Technology Solutions Corp (NASDAQ:CTSH) in the third quarter by acquiring 285,000 new put shares of the company, good for $13.59 million. Recently, the law firm Strauss Troy filed a class action lawsuit against Cognizant on behalf of the company’s shareholders, alleging that some of the company officers violated federal securities laws. The New Jersey-based IT company reported third quarter EPS of $0.86 on $3.45 billion revenue, versus the consensus estimate of $0.84 EPS and $3.45 billion. Ken Griffin’s Citadel Investment Group owns 3.84 million shares of Cognizant Technology Solutions Corp (NASDAQ:CTSH), as of the end of the third quarter.

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Disclosure: None