(Bloomberg) -- Jeff Talpins’ Element Capital Management built a stake in exchange-traded funds tracking the S&P 500 that was worth about $2 billion at the end of September — trades that paid off when Donald Trump recaptured the White House.
The macro hedge fund acquired a $954 million stake in the Vanguard S&P 500 ETF during the third quarter, according to a regulatory filing, and boosted its holding in the iShares Core S&P 500 ETF to about $1 billion. The S&P benchmark jumped 3.5% in the week that followed the Nov. 5 election.
The value of Element’s stakes in the two ETFs climbed $78 million since the end of the third quarter, assuming the firm still held the same number of shares in each when US markets closed Tuesday.
Element gained about 4% during the first week of November after logging a 10% return this year through October, Bloomberg reported last week. The firm also wagered that the US dollar would rally, while shorting European equities. The Bloomberg Dollar Spot Index climbed on Tuesday to its highest in two years, sending the euro to its lowest level in a year.
With Republicans also gaining a majority in the Senate and retaining a narrow lead in the House, investors expect the next Trump administration to enact policies that could benefit stocks, such as tax cuts and a more favorable regulatory regime for mergers. Bitcoin and other cryptocurrencies also soared amid expectations that Trump’s policies will boost digital assets.
Other hedge fund managers will reveal whether they made so-called Trump trades by Thursday — the deadline for money managers overseeing more than $100 million of equities to detail the stocks and options they held at the end of the third quarter.
One of the biggest winners so far is Chris Rokos, a macro manager who makes large trades tied to political and economic trends and events. His Rokos Capital Management reaped almost $1 billion in profits on the day after the election, according to people with knowledge of the gains.
In April, Element disclosed it was returning $4 billion to outside clients, telling them it wanted to shrink to improve returns and focus on managing capital for employees of the firm, including Talpins, who added $500 million of his own money at the time.
Element expected to complete that process by the end of April, leaving it with net assets of about $5 billion. Gross assets, which include the impact of leverage, totaled $74.8 billion at the end of last year.
Element also sold all of its holdings in at least 14 banks and private capital firms during the third quarter, including KKR & Co., Blackstone Inc. and Apollo Global Management Inc., according to the filing. Element had acquired these stakes during the second quarter, and they had a combined market value of almost $139 million as of June 30.
--With assistance from Hema Parmar.
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