Short-sellers tar­get un­der­taker

The Sunday Telegraph - Money & Business - - Business - By Jack Tor­rance

SHORT-SELLERS have ramped up their bets against un­der­taker Dig­nity af­ter the com­pe­ti­tion watch­dog be­gan an in­quiry into the funeral in­dus­try, which is in the midst of a price war.

Hedge funds Lom­bard Odier, Black­rock and Me­rian have all in­creased their short po­si­tions against the funeral provider in the last three weeks. At least 2.9pc of Dig­nity’s shares are now on loan, up from zero dis­closed shorts in Septem­ber.

The Com­pe­ti­tion and Mar­kets Au­thor­ity launched a full-scale in­ves­ti­ga­tion in Novem­ber af­ter find­ing that funeral prices had risen at more than three times the rate of in­fla­tion over the past 10 years.

Dig­nity, Bri­tain’s only listed un­der­taker, has been in turn­around mode since warn­ings about height­ened com­pe­ti­tion from low-priced ri­vals wiped two thirds off its stock mar­ket value be­tween last Novem­ber and Fe­bru­ary this year. It brought in con­sul­tants LEK to ad­vise on a cost-cut­ting over­haul and has been ex­per­i­ment­ing with lower prices af­ter the Co-op­er­a­tive Group knocked £100 off the cost of its cheapest pack­age.

Dig­nity wel­comed the CMA probe, in­sist­ing it wanted “greater trans­parency on pric­ing, more con­sumer choice and high lev­els of qual­ity”. But the news knocked 17pc off its shares, now trading around a five-year low.

The Gov­ern­ment is also look­ing at tight­en­ing reg­u­la­tion of the pre-plan funeral mar­ket amid concern that some buy­ers are be­ing ripped off by rogue sellers.

Dig­nity de­clined to com­ment.

Mike Mc­col­lum, Dig­nity’s chief ex­ec­u­tive, brought in con­sul­tants LEK ear­lier in the year to ad­vise on strat­egy

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