Miserly hedge funds still seeking a bargain at Asos

THOSE miserly hedge funds clearly haven’t got into the Christmas spirit. They are predicting more pain for online fashion retailer Asos, even after its 45 per cent share price dive last week.

Asos has come under fire from short-sellers betting £230 million that its share price will keep falling after Monday’s profit warning, caused by hefty discounting.

The company’s short position hit a three-year high on Thursday of 12.09 per cent, according to IHS Markit, which analyses a wide variety of holdings. That is up from less than 9 per cent before the profit warning.

Short-sellers borrow shares, sell them and then buy them back at a lower price for a profit (an expensive game if the share price rises).

Hedge funds such as London-based Marshall Wace have raised their short positions, while American giant Citadel has now entered the fray.

Perhaps they are avid readers of Morgan Stanley’s research. Crystal ball gazers at the investment bank saw trouble brewing, having predicted just a few days earlier that Asos was burning through cash.

‘Something’s got to give,’ they said in a rather prophetic statement.

E MMA WALMSLEY gave GlaxoSmithKline investors an early Christmas gift when she revealed the break-up of the drugs firm – something many have been longing for. By merging the consumer healthcare division with Pfizer’s, GSK’s boss plans to spin the new company off within three years.

What flew under t he radar last week was that she also plans to offload £ 1 billion of products as part of the joint venture.

That means Sensodyne and Aquafresh toothpaste, nicotine replacement Nicorette and headache tablet Panadol could be up for sale. Suitors will be licking their lips at the prospect of a bidding war.

MOST City traders may already have left the Square Mile for the Christmas break, but that doesn’t mean the stock market will be coming to a standstill this week.

Tomorrow marks the FTSE 100’s last reshuffle of 2018.

Royal Mail will be ejected from the blue chip index along with Just Eat. Taking their places will be insurer Hiscox and Spirax-Sarco Engineering.

Under-pressure holiday firms Thomas Cook and On The Beach are among the firms being demoted from the FTSE 250, while newly-listed Aston Martin and Funding Circle will be replacing them.