Dalio, Tepper Pounce on Euro Opportunity While Buffett, Soros Hang Back
The euro’s losses have been Ray Dalio’s gains in 2015. According to Bloomberg, the billionaire’s Bridgewater Associates has climbed about +14% this year through March in one of its strategies. A bet against the euro is fueling the fire.
The euro fell 11% against the dollar in the first quarter. Dragged down by the ECB’s launch of a 1.1-grillion-euro bond purchase program and facing increased pressure over Greece, the currency brushed its lowest levels in years. Bridgewater addressed the issue in its 2015 strategic report. “The lack of aggressive policy action by the ECB and other governing actors has resulted in stagnation and depression across much of the Eurozone,” the firm wrote in the document, which was reviewed by Bloomberg.
Europe’s currency and economy have captured the attention of billionaire investors beyond Ray Dalio.
Speaking at the Robin Hood Investors Conference in October of last year, David Tepper told the audience that he had taken a short position against the euro. The president and founder of Appaloosa Management anticipated the European Central Bank loosening policy in an effort to stave off another recession.
Tepper hasn’t spoken of his euro short since; however, given the currency’s decline, it has likely proven a solid bet for the billionaire.
Warren Buffett has been eyeing Europe as well. In a February interview, the Oracle of Omaha indicated he was looking at companies in Western Europe, though he wasn’t candid on which. In late March, he addressed the region’s currency in a chat with CNBC.
“Well I’ve thought that the euro has structural problems from the moment it was put in which does not mean it will necessarily fail but I mean you can adapt those structural problems,” he said. “Maybe some countries won’t adapt and they won’t be in.” His conclusion: it may “not be a bad thing” for Greece to leave the euro.
But unlike Dalio and Tepper, Warren Buffett isn’t placing any bets on the euro, short or long. “I don’t have a dime on it,” he said.
George Soros may be putting money on Europe, but instead of waging against the region’s currency, he is looking to give a helping hand. The billionaire has said he is prepared to pump $1 billion into Ukraine.
On Greece, however, Soros is has all but thrown in the towel. He told Bloomberg Television in March that the chances of Greece leaving the euro area are now 50–50 and said the country could go “down the drain.”
As for currency plays, Soros, who is famously known as the man who broke the bank of England, won’t be getting his feet wet. He acknowledged that the start of quantitative easing by the ECB at a time when the U.S. Federal Reserve is considering raising interest rates “creates currency fluctuations.” While he said the scenario probably creates some great opportunities for hedge funds, he clarified that he’s “no longer in that business.” Soros officially and finally retired from the hedge fund world at the start of 2015.
