Revealed... hedge fund kings betting against our firms
B&M, Ted Baker, Autotrader and Carnival Cruises in the firing line as billionaires aim to cash in on slump
SOME of the world’s most powerful hedge funds have placed bets against British businesses for the first time in years, The Mail on Sunday can reveal. Billionaire speculators who have launched bids to cash in on the stock market turmoil and looming recession in the UK include an investment firm set up by an American who staged a bid to run against Donald Trump for the US presidency and one of Italy’s richest families.
They stand to make huge profits if shares in the companies they have targeted collapse after using the controversial trading tactic called short-selling. This is where hedge funds borrow shares, sell them, and then try to buy them back at a lower price and pocket the difference when they return the shares to the original owner.
US- based Farallon Capital has taken out a £20 million short position out against discount retailer B&M Stores. The hedge fund wsa founded in 1986 by Tom Steyer, who stood as a candidate to lead the Democrat Party into this year’s election.
The bet against FTSE 250-listed B&M Stores is the first time Farallon – which is based in San Francisco and named after islands near the city – has bet against a British business since April 2018, according to data provider ShortTracker.
Farallon’s previous UK short bets were against industrial turnaround group Melrose and betting giant GVC which owns Ladbrokes Coral.
Another hedge fund betting on share prices falls for a British business is Exor Investments LLP, an investment group backed by the Agnellis, one of Italy’s wealthiest families. At the head of the family is John Elkann, the chairman of Fiat Chrysler and grandson of Gianni Agnelli, the industrialist who founded the carmaker Fiat.
Exor has taken out a short contract worth about £ 50 million against Ashtead, which rents out industrial equipment, such as drills, pumps and ventilators.
It is first time Exor has ever disclosed a short position in a UK company, according to ShortTracker.
Other funds which have taken out big bets against British businesses over the past few months include Point72 Asset Management and WorldQuant.
Point72, based in Connecticut, has taken out short positions against
‘Some didn’t move quickly enough’
second-hand car advertiser Autotrader, insurer Beazley and fund manager Jupiter, which is chaired by Nichola Pease, wife of hedge fund tycoon Crispin Odey.
Point72 Asset Management is the family investment office of Steve Cohen, one of America’s bestknown billionaire hedge fund managers art collectors and philanthropists. He founded another hedge fund, SAC Capital, in 1992. It grew to manage $14 billion but eventually closed down because the firm was fined $1.8 billion for insider trading.
Cohen is estimated to be worth $14.1 billion, according to wealth magazine Forbes.
WorldQuant – a US firm led by Belarus-born trader Igor Tulchinsky – has taken out short positions against cruise ship operator Carnival and fashion brand Ted Baker.
HFM, a data provider, said the biggest increases to existing short positions in British companies involved retailer Pets at Home, car dealer Inchcape, shopping mall operator Hammerson, easyJet and airport ground handler John Menzies Group.
Hammerson has become one of the most shorted stocks in the London market, with more than 7 per cent of the company in the hands of short sellers such as New Yorkbased Newbrook Capital.
Newbrook took out a bet against Hammerson a month ago but recently doubled its short contract against the property company, which is facing demands from high street retailers for rent cuts.
The bets against beleaguered British businesses come after the FTSE 100 crashed 30 per cent in the first three weeks of March, with the index at one point falling below the 5,000 level. However, last week some funds, such as WorldQuant, cut the size of their shorts as the market started to bounce back, with the FTSE rallying 5.9 per cent last week. Blackrock, the world’s biggest fund manager, reduced its bet against roadside recovery company AA by 2.32 percentage points.
Will Waineright, editor of EuroHedge, said: ‘Last week we saw a lot of big short positions being cut or removed entirely as hedge funds cashed in their gains from big declines earlier in the month.’
He added: ‘The small recovery in markets would have caught out some who didn’t move quickly enough. But many [hedge funds] are increasing short positions too, as they re-focus their portfolios on opportunities presented by the new economic world of coronavirus.’
The best performing hedge fund so far this year is New York-based Saba Capital Offshore Fund, run by ex Deutsche Bank trader Boaz Weinstein. His fund, which specialises in placing bets against junk bonds, has surged 81.66 per cent in 2020, according to data from HSBC. Some rivals, however, have been been caught out by the market slump, the MoS research found. Lansdowne Partners, one of the UK’s oldest hedge funds, endured particularly spectacular losses.
The company was set up by Tory party donor Sir Paul Ruddock, a former chairman of the Victoria and Albert museum, who l eft Lansdowne in 2013.
Five of its funds made it onto the HSBC’s list of worst performing hedge funds of 2020. Lansdowne’s Princay Fund has fallen the furthest so far this year, 46.6 per cent. Lansdowne’s Developed Markets Long Only Fund wasn’t far behind, plunging 42.34 per cent in 2020.