No hugs for Ted Baker as the hedge funds go short
TED Baker boss Ray Kelvin hit the headlines when the retailer appointed a law firm to investigate its ‘hugging culture’, but hedge funds aren’t showing his company’s shares much love.
They were already betting against the fashion brand, but raised their short positions in the FTSE250 firm on Monday after the hugging scandal.
Data from analyst IHS Markit shows a notable increase in short interest positions from 6.6 per cent on Friday last week to 7.4 per cent on Monday in a wager worth about £50 million. Short-sellers, who in this case include New York-headquartered BlackRock and London-based Marshall Wace, borrow shares, sell them and then buy them back at what they hope is a lower price, pocketing the difference in the process.
Just minutes before the markets closed on Friday, the company revealed that Kelvin was to take a ‘leave of absence’ while the allegations are investigated.
The share price took a sharp dive, but could have further to go when markets reopen tomorrow morning, meaning that the short-sellers could cash in again.