Hedge funds go into overdrive with £94m bet on Aston Martin share slide
ASTON Martin has come under fresh attack from short- sellers, heaping more pressure on underfire boss Andy Palmer after yet another share slump.
Bets against the luxury car company hit an all-time high last week as investors gambled on further falls in the share price.
As many as 8.2 per cent of Aston Martin’s shares are on loan to investors, according to data firm IHS Markit.
Short- sellers – usually hedge funds – borrow shares from other investors, sell them and then hope to buy them back at a lower price, pocketing the difference as they return the shares to the original owners.
About £94 million worth of shares in Aston Martin, which was made famous by the James Bond films, are being‘ shorted’ by investors who are expecting fresh price drops.
Data published by City watchdog the Financial Conduct Authority shows just two short- sellers – France’s Carmignac Gestion and London’s AKO Capital – together account for 1.59 per cent of the FTSE 250 company’s share capital.
However, the regulator discloses only major individual short positions above 0.5 per cent. Those with ‘shorts’ below that threshold do not have to disclose their positions, meaning the overall number of short positions is much larger.
Last week, chief executive Palmer refused to answer questions about his future after the share price crashed again when the firm posted a pre-tax loss of nearly £80 million for the first six months of the year.
The share price is languishing at £4.63 – a mere quarter of the value at the flotation last October when bankers priced it at £19.
Former Nissan executive Palmer blamed ‘continued macro-economic uncertainty’ for the woes.
Aston Martin issued a profit warning just a week earlier, when it confirmed it will sell fewer cars this year than first expected.
Palmer and the firm’s army of bankers and advisers are now facing questions about the price tag they placed on the company when it joined the London Stock Exchange last year.
Aston Martin is now valued at £1.1 billion, leaving it more than £3 billion short of making it on to the FTSE 100, which was Palmer’s ambition in the run-up to the flotation.
The company, which has gone bust seven times in its 106-year history, is pinning its hopes on the DBX, its first SUV, which is largely aimed at women buyers.
Aston Martin declined to comment.