How They Hedged Brexit: Soros Was Short Deutsche Bank, Druckenmiller Was Long Gold

As we reported yesterday, one of the bigger losers from the Brexit referendum was none other than Soros, who as it turned out had put his money where his "doom and gloomy" Guardian Op-Ed was and as a spokesman said, Soros was long the pound before Britain’s vote to leave the European Union on Friday, and didn’t “speculate against sterling while he was arguing for Britain to remain.” 

Soros wasn't the only one long sterling. According to internal UBS flow data, the pound saw the strongest normalized net inflows in G-10 in the lead up to the U.K. referendum on EU membership, recording the second-strongest week of net buying in over a year and a half suggesting hedge funds bought the pound aggressively before the vote. Curiously, as UBS also notes, despite buying GBP at the highest level since 2008, outflows from the pound recorded on the Friday after the referendum outcome were only marginal despite a 17-big- figure sell off in morning trading.

But back to recently bearish Soros, who many were surprised to see have an unhedged position going into such a major event. Well, as it turns out Soros was hedged after all.

As Bloomberg reports, Soros Fund Management took a short position in Deutsche Bank AG of about 7 million shares, or a total notional of about $100 million, as turmoil from the U.K.’s decision to leave the European Union sent bank stocks lower. The position taken on Friday was equivalent to 0.51 percent of Deutsche Bank’s share capital, according to a German filing published on Monday. The document doesn’t show at which price the fund took the position.

Deutsche Bank shares fell 16% at the open on Friday and closed down 14 percent at 13.37 euros. Their highest price that day was 13.95 euros. At that level, a 0.51 percent stake would be worth about 98 million euros ($108 million). After extending losses on Monday, the shares were trading 4.5 percent higher at 10 a.m. Tuesday in Frankfurt.

In other words, Soros' Op-Ed which was subtitled "The Brexit crash will make all of you poorer – be warned", should have added that "it will also make me richer via my Deutsche Bank short."

Soros was not the only one who hedged. As Reuters reported overnight, Stanley Druckenmiller's Duquesne Family Office LLC was long gold futures ahead of last week's vote in Britain to leave the European Union, a source familiar with the matter said on Monday.

Gold soared on Friday in its best day since 2009, hitting two-year highs as uncertainty after Britain's vote to leave the European Union pushed investors to sell equities and seek safer assets. The size of the trade was not known.

In short: while Brexit's so-called "disastrous" impact on millions of common people has yet to be observed , a process which will take years, the billionaires once again won.