Hedge funds puncture Christmas cheer with predictions of further meltdown
A recent spate of closures, retrenchment and profit falls on the High Street may be no mere aberration but could be symptomatic of a longer term downward trend in the industry, according to the latest hedge fund predictions.
Famous for betting not on winners, but on losers, these financial alchemists are betting hundreds of millions of pounds on a retail Armageddon this Christmas, with familiar names such as WH Smith, Tesco and Dixons all expected to see the valuation of their stock fall.
The list of firms was published following the introduction of new rules buy the Financial Services Authority with one of the biggest players, Lansdowne Partners, betting £163m that Tesco’s share price will decline and £159.8m that Wm Morrisons will do likewise.
Known as a short sale this entails borrowing and then selling shares, with the intent to buy them back at a later date following an anticipated fall in prices.
Surprisingly the biggest short position by percentage of market value id a bet by Greenlight Capital against Daily Mail & General Trust, valued at 4.4% of the company and worth £80.7m.