Hedge funds see the big picture of Cineworld’s debt
IF ANY company could do with a blockbuster trading update, it’s Cineworld.
The cinema operator’s shares have lost a third of their value in six months, which scribblers at Peel Hunt reckon is because of concerns about a weak film slate next year and because it is losing market share in the US.
Some in the City have other concerns. They argue that the company is now up to its eyeballs in debt after its £2.4billion takeover of US operator Regal Entertainment. Perhaps that’s why the hedge funds are circling.
The FTSE 250 company has quietly become the most shorted on the London Stock Exchange, according to data from the Financial Conduct Authority.
More than 12 per cent of its shares are now on loan to traders betting that the price will fall further.
Those short positions rose again last week, which means they will cash in if Tuesday’s trading update fails to impress.
Perhaps the hedge funds – many of which are American – have some intel on the US cinema market, where Cineworld generates three-quarters of its revenues after the Regal deal.
EASYJET’S spot on the FTSE100 runway of bluechip shares is set to be confirmed on Wednesday, following the latest quarterly reshuffle of indices.
After a mere six month absence from the top flight of shares, the airline is set to return, boosted by the demise of tour operator Thomas Cook.
It has leapt at the chance to relaunch its package holidays business, spotting a gap in the market. A lower crude oil price also suggests cheaper fuel.
No such luck for a return at the first attempt for Marks & Spencer, which looks set to remain in the FTSE 250.
JUST days after Playtech announced its financial trading arm TradeTech was struggling, spreadbetting rival IG Group will give an update on its first-half performance.
It follows a tough year for the sector after a crackdown on spreadbetting products that had left many private investors nursing losses.
But number-crunchers at Peel Hunt reckon IG, the largest in the sector, could continue to grow.
Playtech said it is exploring all options for TradeTech – including a sale – and IG is an obvious buyer. Perhaps the crackdown could reap rewards for IG.