Clinically: Igor Tulchinsky, with ex-wife Valentina
Some of the world’s most powerful hedge funds have placed bets against UK companies for the first time in years, The Mail on Sunday may reveal.
Billionaire speculators who have made bids to capitalize on the stock market turmoil and the emerging UK recession include an investment firm created by an American who made an offer for Donald Trump for the US presidency and one of the richest families in Italy.
They will make huge gains if shares in the companies they target collapse, after using the controversial trading tactic called short-selling. This is where hedge funds borrow, sell 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 a short position of £ 20 million against discount seller B&M Stores. The WSA hedge fund was founded in 1986 by Tom Steyer, a candidate to lead the Democratic Party into elections this year. The bet against FTSE 250-listed B&M Stores is the first time Farallon – based in San Francisco and named after islands near the city – has bet against a UK company since April 2018, according to data provider ShortTracker.
Farallon’s earlier UK short bets were against industrial turnaround group Melrose and gambling giant GVC, which owns Ladbrokes Coral. Another hedge fund that bets on stock quotes for a UK company is Exor Investments LLP, an investment group backed by the Agnellis, one of Italy’s wealthiest families.
The head of the family is John Elkann, Fiat Chrysler chairman and grandson of Gianni Agnelli, the industrialist who founded the car manufacturer Fiat.
Exor has entered into a short contract worth approximately £ 50 million against Ashtead, which rents out industrial equipment such as drills, pumps and fans. According to ShortTracker, it is the first time that Exor has announced a short position in a British company.
Other funds that have placed large bets against UK companies in recent months include Point72 Asset Management and WorldQuant. Based in Connecticut, Point72 has taken short positions against second-hand car advertiser Autotrader, insurance company Beazley and fund manager Jupiter, chaired by Nichola Pease, wife of hedge fund magnate Crispin Odey.
Point72 Asset Management is the family investment office of Steve Cohen, one of America’s best known billionaire hedge fund managers, art collectors and philanthropists. He established another hedge fund in 1992, SAC Capital. It grew to $ 14 billion, but eventually closed because the company was fined $ 1.8 billion for insider trading.
Cohen is estimated at $ 14.1 billion, according to the wealth magazine Forbes. WorldQuant – an American company led by Belarusian-born merchant Igor Tulchinsky – has taken short positions against cruise ship operator Carnival and fashion brand Ted Baker. HFM, a data provider, said the largest increase in existing short positions in UK companies was the retailer Pets at Home, car dealer Inchcape, shopping center operator Hammerson, easyJet and airport handler John Menzies Group.
Hammerson has become one of the most short-circuited stocks in the London market, with more than 7 percent of the company held by short sellers such as Newbrook Capital of New York. Newbrook made a bet against Hammerson a month ago, but recently doubled its short contract against the real estate company, which is facing demands from high street retailers for rent cuts.
Betting man: Tom Steyer was a candidate to lead Democrats to elections this year
Bets on beleaguered UK companies come after the FTSE100 crashed by 30 percent in the first three weeks of March, with the index falling below 5,000 at one point. However, last week, some funds, such as WorldQuant, shrunk their shorts when the market started bouncing back, with an FTSE of 5.9 percent last week.
Blackrock, the world’s largest fund manager, cut his bet against road overhaul company AA by 2.32 percentage points. Will Waineright, editor of EuroHedge, said, “Last week we saw many large short positions being cut back or completely removed, as hedge funds cashed in on their gains from major declines earlier this month.”
He added, “The small recovery in the markets would have caught some who weren’t moving fast enough. But a lot [hedge funds] Short positions are also increasing as they refocus their portfolios on opportunities offered by the new economic world of the corona virus. ‘
The best-performing hedge fund to date this year is the New York-based Saba Capital Offshore Fund, run by ex-Deutsche Bank trader Boaz Weinstein. His fund, which specializes in placing bets on junk bonds, has risen 81.66 percent in 2020, according to HSBC data.
However, some rivals have been caught in the market slump, the MoS study found. Lansdowne Partners, one of the oldest hedge funds in the UK, has suffered particularly spectacular losses. The company was founded by former Tory party donor Sir Paul Ruddock
president of the Victoria and Albert museum, which left Lansdowne in 2013. Five of the funds entered the HSBC list of worst performing hedge funds of 2020. Lansdowne’s Princay Fund has fallen the most so far this year, 46.6 percent. Lansdowne’s Developed Markets Long Only Fund was not far behind, plunging 42.34 percent in 2020.
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