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How The Swiss National Bank Almost Crushed George Soros

Tyler Durden's picture




 

Minutes after last week's Swiss National Bank shocker, jokingly we mused:

... because there would be nothing more ironic if the man who "broke the Bank of England" ended up being FXCMed himself by another central bank, over two decades later and just as he was set to finally retire, at the age of 84, formally, something he supposedly announced in Davos yesterday.

As it turns out, we were almost correct, and according to the WSJ, Soros Fund Management, which manages more than $25 billion for investor George Soros, was betting against the Swiss franc in the fall before it removed those bearish positions.  Why did the Soros so conveniently take off a bet which, with leverage, could have resulted in massive losses for his hedge fund? The WSJ says he did so after "viewing the risk as too high relative to potential gains, said people close to the matter." Well as long as "people close" think Soros did not have input directly from the Swiss central bank, or perhaps the occasional hint from Kashya Hildebrand, then one can't help but marvel at the octogenarian's impeccable timing.

As a result, the franc’s surge last week didn’t have a major impact on Mr. Soros’s firm’s profits, "these people said." Naturally, if Soros was still short the CHF, he would have suffered massive losses.

Curiously, Soros wasn't the only one to "luckily" pull his bearish CHF exposure ahead of the 30% move: Brevan Howard Asset Management, run by billionaire Alan Howard , was profiting from a negative bet on the Swiss franc against the dollar before it cut back shortly before the Swiss currency soared. Brevan’s flagship $23.7 billion fund gained 0.8% last week, taking gains for this year to 1.9%.

How lucky.

So Soros and Brevan were spared due to some truly impeccable timing. Others were not as lucky. Here is a quick recap of all the hedge funds (excluding the numerous retail FX brokers such as FXCM that blew up in the aftermath) that have been known to have suffered terminal or partial, but still cripppling, losses. We already know about

  • Marko Dimitrijevic, who survived at least five emerging market debt crises, is closing his largest hedge fund after losing virtually all its money when the SNB unexpectedly let the franc trade freely against the euro, according to a person familiar with the firm. Everest Capital’s Global Fund had about $830 million in assets as of the end of December, according to a client report. The Miami-based firm, which specializes in emerging markets, still manages seven funds with about $2.2 billion in assets. The global fund, the firm’s oldest, was betting the Swiss franc would decline, said the person. A spokesman declined to comment on the losses. Calls to Dimitrijevic weren’t returned.
  • Michael Platt’s BlueCrest Capital Management lost 5.5 percent in its macroeconomic fund through Jan. 16, two people with knowledge of the matter said. Amid the losses, Luke Halestrap and Peter McGarry left the $15 billion Jersey-based firm and BlueCrest shut a portfolio run by currency money manager, Peter Von Maydell, according to people with knowledge of the decisions. Von Maydell, Halestrap and McGarry didn’t reply to e-mails and telephone messages seeking comment.
  • Comac Capital, the $1.2 billion firm run by Colm O’Shea, is returning money to clients after it lost 8 percent from the franc surge. The declines bring its loss this month to 10 percent, according to a person familiar with the matter. London-based Comac will continue to trade with internal money, the person said. A spokesman declined to comment.
  • Fortress Investment Group’s main macro hedge fund lost 7.6 percent last week, a period during which markets were roiled by movements in the Swiss franc. The macro fund’s decline last week brought its losses this year to 7.9 percent, Reuters reported, citing a letter to investors. Fortress didn’t give a reason for the loss in the letter, according to Reuters. Gordon Runte, a spokesman for Fortress, declined to comment.
  • SaxoBank moments ago reported it would lose up to $107 million on the Swiss Bank move.

But while the vast majority of "hedged" speculators were massively short the CHF into the Swiss announcement, there were some who bet against the central bank, and made huge profits.

First and foremost among these, Quaesta Capital AG: "The firm, which oversees $3 billion in Pfäffikon, Switzerland, bought options “a considerable time” ago betting that the euro would drop below 1.20 francs, said Chief Executive Thomas Suter."

Those bets paid off last Thursday, when the Swiss National Bank ’s decision sent the franc soaring against the euro and delivered a boost to investors in a $120 million Quaesta strategy that is up at least 14% this year, according to a letter to investors.

 

“We immediately knew that it was going to be a very, very good day for this strategy and its investors,” said Mr. Suter, who said the firm made the bet because of its low cost and high potential rewards.

Omni Partners was another such winner, which "locked in a small profit, by making small trades that it closed out the same day following the massive franc-euro swing, according to a person familiar with the matter. Omni Partners has about $1 billion under management in London.

London-based macro hedge fund Rubicon Global was down 2.3% at the end of the first full week of January but recouped most of those losses, helped by a positive bet on the Swiss franc, said a person familiar with the matter. Rubicon declined to comment.

 

Stockholm-based Lynx Asset Management, which manages $5.5 billion, gained more than 2% last week, helped by bets against the euro. The firm is up about 4% this year to Jan. 16, said a person who has seen the numbers.

We expect to learn about even more victims and casualties in the coming days as career-ending margin calls can only be pushed straight to voicemail for so long.

As for everyone in the investing world else who was spared the violent move either to the up or downside, fear not: as more central banks retreat from currency wars, now that things are really heating up, the volatility seen last week will be merely a pleasant reminder of what is about to come as the Big Three move from mere soundbites and proceed to all out tactical FX warfare, until one day, China joins in as well. Then all bets are off.

 

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Fri, 01/23/2015 - 12:43 | 5697029 surfvin
surfvin's picture

I'd love to see this baby blood drinker scrubbing toilets in a Brazilian disco.

Fri, 01/23/2015 - 12:46 | 5697042 czarangelus
czarangelus's picture

Good lord every conspiracy theory is true. If all this pedophile and Satanist stuff is true, which all evidence and then some indicates it totally is, then I see no reason why David Icke and some of the other old school investigative journalists shouldn't be totally correct about the space reptilians too. Which means combatting conspiracy against humanity requires taking on cosmic and spiritual dimensions.

Fri, 01/23/2015 - 12:54 | 5697077 besnook
besnook's picture

you are only an ant. what until you become a grasshopper. you'll understand more. reptile takes a long time.

Fri, 01/23/2015 - 16:16 | 5697776 monad
monad's picture

They aren't techno-angels, just organized criminals who make shit up.

Fri, 01/23/2015 - 12:46 | 5697043 Quinvarius
Quinvarius's picture

Soros is a complete fraud.

Fri, 01/23/2015 - 12:48 | 5697049 Thisisbullishright
Thisisbullishright's picture

I hope the mob has Soros in their top 10 when the time comes....

Fri, 01/23/2015 - 12:52 | 5697063 surfvin
surfvin's picture

When our father returns love and forgiveness will not be riding shotgun.

Fri, 01/23/2015 - 13:04 | 5697112 forwardho
forwardho's picture

Is that like?

Jesus is coming, and man is he pissed.

Fri, 01/23/2015 - 12:52 | 5697065 maneco
maneco's picture

These guys (Howard and Soros) are in touch with the Central bankers. They do what the Central banks need them to do and make billions in the process.

Fri, 01/23/2015 - 12:59 | 5697090 Sandmann
Sandmann's picture

He uses the Ivan Boesky - Marty Siegal Method

Fri, 01/23/2015 - 17:19 | 5698001 MeelionDollerBogus
MeelionDollerBogus's picture

For the rest of us... there's the Lebowski-Nihilist method. Put a toe in like you don't care ... and get it cut off

Fri, 01/23/2015 - 13:00 | 5697092 Oldwood
Oldwood's picture

Talk about bread and circuses.

This post and comments reminds me of throwing christians to the lions...a kind of murderous blood fever thing going on.

Anything to distract and excuse us from our own stupidity and weaknesses.

Yes Soros is a scumbag. But if it were not for all the "investors" out there trying to do what he does...and failling at it, none of this shit would matter. What is shocking is that so many only now seem to recognize that the game is rigged, that the insiders are the winners and everyone else is the mark. And yet the game continues...

Fri, 01/23/2015 - 17:18 | 5697985 MeelionDollerBogus
MeelionDollerBogus's picture

No: it matters that we are forced to use national currency for wages, import & export and forced to pay taxes in them yet have no control over how those currencies work.

That's not a choice. It's not being played, it's being enslaved.

Fri, 01/23/2015 - 13:00 | 5697102 forwardho
forwardho's picture

while I try not to stoop to a level where someones appearance becomes fodder for amusement....

Soros looks like some kind of evil character from a Star Wars flick.

 

Fri, 01/23/2015 - 13:04 | 5697118 kchrisc
kchrisc's picture

And some still think that Zionism is a myth. LOL

The banksters need to repay us.

Fri, 01/23/2015 - 15:49 | 5697691 Oldwood
Oldwood's picture

The fact is, stupidity is a reality that a small but significant number of people profit from. Maybe we should learn. Maybe we should strive to understand how and why we are manipulated to do what we do. 1% or even .1% cannot do this alone. They need accomplices, they need participants who will hand them money to invest, who will encourage you to put your money on the table across from theirs, extolling the fairness of the game, and the phenomenal chances to WIN!. Sure, they will let you win a few hands as is needed to anti up the bet, but THEY always win in the end. They are not gambling, they only set up the table, print the cards and shuffle the deck,and most time deal. Let history be your guide.

The Banksters don't owe us shit. We were played. They lied, we believed. We lost. We should learn...but we won't. A good education is typically pretty expensive, but especially so if you learn nothing from it.

Fri, 01/23/2015 - 17:15 | 5697982 MeelionDollerBogus
MeelionDollerBogus's picture

The baskets under the guillotine never make accounting errors on the balance sheet.

Fri, 01/23/2015 - 13:06 | 5697128 besnook
besnook's picture

aren't hedge funds suppose to cover the other side to offset risk? is the missing news the long bets the lizard collected on?

Fri, 01/23/2015 - 13:07 | 5697129 Pullmyfinger
Pullmyfinger's picture

Soros has merely been well compensated for being a loyal soldier of the Rothschild empire.

Fri, 01/23/2015 - 13:10 | 5697137 Batman11
Batman11's picture

The rich have communication channels not available to the rest of us.

When the Icelandic Icesave collapsed I got caught, my rich friend heard in time.

 

Fri, 01/23/2015 - 13:16 | 5697154 fast and furious
fast and furious's picture

NO one is THAT smart.  Figure it out.

Fri, 01/23/2015 - 13:20 | 5697174 northern vigor
northern vigor's picture

Soros sold his soul many years ago...he still gets dividends.

Fri, 01/23/2015 - 13:21 | 5697168 Victory_Garden
Victory_Garden's picture

Ahhhh who gives a fark about what this criminal scum bag traitor loses, or not. All the people want to see this asshat hanging from his nards on a very high telephone pole.

Fri, 01/23/2015 - 13:26 | 5697206 JPMorgan
JPMorgan's picture

Yup Insider knowledge at work, someone got a nice kick back for the tip off.

Fri, 01/23/2015 - 13:32 | 5697209 billsbest
billsbest's picture
Being privileged by inside info to dump his Swiss franc shorts before the SNB took its action does give one to pause. What did Soros bring to the Rothschild banking syndicate to be trusted as a made-man. Maybe just being close to the Anglo-American syndicate impressed the chief capo.   Find the Soros Quantum as a moneymaker for the Rothschild clan.

 

Fri, 01/23/2015 - 13:56 | 5697342 Dodge
Dodge's picture

Nice flow chart.

Fri, 01/23/2015 - 13:32 | 5697238 q99x2
q99x2's picture

Arrest him and prosecute him for his crimes.

Fri, 01/23/2015 - 13:47 | 5697300 jubber
jubber's picture

Reminds me of Buffet taking a big chunk of Goldman Sachs miracuosly just before the Fed bailed them out!

Fri, 01/23/2015 - 13:47 | 5697301 Dodge
Dodge's picture

Close but no cigar. Hidden surveillance footage of how it all went down and Soro's special adviser. There's a sucker in every bunch.

Fri, 01/23/2015 - 14:10 | 5697378 Mike Honcho
Mike Honcho's picture

I think David Icke has some proof right here, not just the same moral compass but look as well, Soros and Jabba the Hut eerily similar.

Fri, 01/23/2015 - 14:23 | 5697421 Billyfx
Billyfx's picture

Likely has Leia chained up in a warehouse in Davos this week, too.

Fri, 01/23/2015 - 14:11 | 5697382 Who was that ma...
Who was that masked man's picture

You'd think Soros could afford a little eye-lift.

Fri, 01/23/2015 - 17:13 | 5697971 MeelionDollerBogus
MeelionDollerBogus's picture

At his age it might pull off the entire snake skin... is he so old now he can't molt and grow another?

Fri, 01/23/2015 - 14:13 | 5697386 Billyfx
Billyfx's picture

Love him or hate him -- great traders like Soros trust their gut and have informants everywhere, which is why they succeed where even central bank types (BOE for ex) fail. What Jordan did at SNB would be enough to lock him up if there were any enforcement body with enough guts to indict the rat -- for what he did to both honest customers of a broad spectrum as well as shops with marginally ethical practices and any firm with crappy risk management who got nailed by his hubris-ridden nuclear statement.  

Fri, 01/23/2015 - 14:40 | 5697496 Blankenstein
Blankenstein's picture

Great traders don't need informants.  So you are sanctioning insider trading?  No wonder these thieving scum get away with their crimes when the sheep think trading on inside information makes you a "great trader."

Sat, 01/24/2015 - 01:15 | 5699109 hedgiex
hedgiex's picture

Yes Great Traders yawn when consiparacy spins fly particularly after some major market events. Often some sore losers cry afoul as do they do not know this game of "kills".

 

Fri, 01/23/2015 - 19:01 | 5698314 Kelley
Kelley's picture

Did you misspell "traitors?"

Fri, 01/23/2015 - 14:14 | 5697395 vyeung
vyeung's picture

The Sith no doubt has his tentacles everywhere, how else would he be a top commando in the NWO! GS brilliance also stems from this insider info. as demonstrated after 08. Brilliant they are but fallible they certainly am. They are not all encumbering as we are lead to believe.

Fri, 01/23/2015 - 14:30 | 5697440 GoldSilverBitcoinBug
GoldSilverBitcoinBug's picture

He removed his position just before the Swiss soaring:

well, it's not insider trading at all. s/

Fri, 01/23/2015 - 14:55 | 5697524 bluskyes
bluskyes's picture

Obviously, or else he would have went long on the Swiss Franc

Fri, 01/23/2015 - 14:37 | 5697468 Eahudimac
Eahudimac's picture

Soros is one scary looking mother fucker. I guess bathing in the blood of infants doesn't do much for the complexion.

Fri, 01/23/2015 - 14:39 | 5697484 LuckoftheIrish
LuckoftheIrish's picture

This comment thread is, by far, the best on ZH in a very long time. I am laughing out loud at work; errrrrmm "blood sucking goblin"!!!!

Fri, 01/23/2015 - 14:39 | 5697485 steveo77
steveo77's picture

As some of the big news agencies start to catch on to the glaring inconsistencies in official statements at the biggest nuclear plant in Europe, it become more curious by the day.   We know the game plan of the nuclear / radiation cartel is always to coverup, then deny, then minimize.

It is interesting to see a snapshot of online visitors to the Nukepro at 7:30AM on a holiday
Czech, Russia, Ukraine, Kazakhstan.......looks like the cat is getting out of the bag and people are searching for information.

http://nukeprofessional.blogspot.com/2014/12/ukraine-radiation-accident-...

 

Fri, 01/23/2015 - 14:40 | 5697489 steveo77
steveo77's picture

Ya know, Soros got a lot of money but I bet he don't get laid that much.

Fri, 01/23/2015 - 14:44 | 5697506 homiegot
homiegot's picture

What a nice old man.

Fri, 01/23/2015 - 15:07 | 5697562 Son of Captain Nemo
Son of Captain Nemo's picture

What isn't getting mentioned that is the equivalent to who caused the earthquake in Fukushima?!!!!

Forget about Russia turning off gas to 6 European countries... Forget the abandonment of the SWIFT payment system and oil contracts with the largest economy in the World...

Cause nothin says sworn enemy to a rabid Zionist Jew then developing gas for the enemy you are genociding!

Fri, 01/23/2015 - 15:12 | 5697586 theyjustcantstop
theyjustcantstop's picture

people, people, people, yes soros is in the club, and he will not lose, his money goes into anti-American everything, and pro NWO everything.

now if you were the BIS, and wanted to sell your ecb-qe, what better advertisement, (false-flag), could you get than the euro tanking.

remember, the BIS is Keynesian, you have to break the windows in the eu. to get your, asset forfeiture, and indentured servitude policy cemented into place.

it's just the old saying, if you have to ask what it cost, you can't afford it,

the BIS never has to ask, as it stands, they can, and will take your job, assets, livelihood, and even your life to forward their agenda, because they can.

the Islamic fundamentalist aren't near as harmful to the world, and human life as global fundamentalist.

 

 

 

 

 

 

Fri, 01/23/2015 - 15:22 | 5697609 Chuck Knoblauch
Fri, 01/23/2015 - 16:49 | 5697891 BubbaJones
BubbaJones's picture

Emperor Palpatine? 

Fri, 01/23/2015 - 16:57 | 5697910 Dodge
Dodge's picture

No more second guessing. Clearly Soros made a guest appearance in the Star Wars universe. Who else could have funded the construction of the Death Star?

Fri, 01/23/2015 - 17:13 | 5697973 MeelionDollerBogus
MeelionDollerBogus's picture

What? The pit bosses are lucky in their own casino?

Ya don'ts say.

Fri, 01/23/2015 - 17:56 | 5698164 Berspankme
Berspankme's picture

Somebody just kill this ridiculous old wrinkled motherfucker. Fuck off Soros

Fri, 01/23/2015 - 18:35 | 5698256 Mi Naem
Mi Naem's picture

Missed him by thhhhhaat much, Chief. 

Sat, 01/24/2015 - 03:29 | 5699191 monad
monad's picture

I would prefer to work with the legal trusts of this ancient lunatic than have my skin peeled off by an accident.

Thats just me.

George: You are my father...

Sat, 01/24/2015 - 04:25 | 5699231 nathan1234
nathan1234's picture

Running with the Devil and not getting burnt!

Are you tryng to learn from father George ?

Sat, 01/24/2015 - 04:18 | 5699224 nathan1234
nathan1234's picture

 

Check the Mario'ss account. And Goldman's too.

It will be another Sorosfull story- of Profit of course or avoiding losses or both

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