George Soros is bracing for a stock market storm.
The legendary investor doubled his negative bet against the S&P 500 to more than $430 million, according to regulatory filings made public this week.
Soros, known as the “man who broke the Bank of England,” is instead investing in gold. He plunked down $387 million to amass new positions in a gold ETF and also bought shares of Barrick Gold, the world’s largest gold miner in the first quarter. Gold tends to do well when people are afraid.
Those three bets are now among the largest in Soros’ hedge fund and reflects how downbeat he is on U.S. markets. Earlier this year Soros sounded the alarm on global financial markets by saying the situation in China reminds him of the 2008 crisis.
“It’s been a while since he’s been this bearish,” said Raul Moreno, CEO and co-founder of iBillionaire, an app that tracks the portfolios of influential investors. “Soros has made money in markets going up or down so people definitely trust what he’s saying.”
Soros has built a fortune on these bets. Forbes estimates he’s worth $25 billion. Soros is best known for betting $10 billion in 1992 against the British pound — a trade that made him $1 billion in a single day.
The latest gloomy positioning by Soros means he’s backing up his recent negative words with action.
“China has a major adjustment problem. I would say it amounts to a crisis,” Soros said in a January speech. “When I look at the financial markets there is a serious challenge which reminds me of the crisis we had in 2008.”
Soros also told Bloomberg at the time that he believes a disruptive collapse of China’s growth is “practically unavoidable.”
Soros isn’t the only big bear these days. Stanley Druckenmiller, who served as the lead portfolio manager at Soros’s hedge fund when it took on the Bank of England, recently warned that China is in the midst of an “extremely rare and quite dangerous” explosion of debt. Druckenmiller also railed against “reckless” behavior by U.S. CEOs and talked up gold, which has rallied 21% so far this year.
Jeff Gundlach, the so-called “king of the bond market,” too recently said he believes gold will soar to $1,400 an ounce.
Soros purchased 1.1 million shares of the popular SPDR Gold ETF during the first quarter. He also bought 19.4 million shares of Barrick Gold, which has skyrocketed 140% so far this year thanks to rising gold prices.
At the same time, Soros owns 2.1 million put options on the SPDR S&P 500 ETF, which closely tracks the performance of the benchmark index. Put options are a way to bet that an investment is going to lose value.
Those moves contrast with CNNMoney’s Fear & Greed Index. The gauge of market sentiment was flashing “extreme fear” earlier this year but these days it’s sitting firmly in “greed” mode.
Of course, Soros isn’t completely running for the hills. Like any good money manager, he’s playing both sides of the market. Soros still has investments worth over $80 million apiece in eBay and Zoetis. During the first quarter Soros also purchased new stakes in Apple, Yahoo, Gap and United Continental, though those are relatively tiny.
But here’s another telling clue from Soros: the value of his hedge fund’s holdings shrank from $6.1 billion at the end of 2015 to $4.5 billion as of the end of the first quarter.
Moreno of iBillionaire said it’s likely a sign of Soros taking a defensive maneuver: moving more of his portfolio to the safety of cash.