Hedge funds bet against WPP amidst expectation of further share price falls
Uncertainty at the top of WPP in the wake of Sir Martin Sorrell’s abrupt departure from the agency network he built over three decades has seen a surge in the number of investors betting against the advertising giant.
Hedge funds turn on WPP amidst expectation of further share price falls / WPP
According to a report in The Times, the percentage of WPP shares on loan has risen from a negligible amount to close to 6% of its share capital in that time according to analysis by IHS Markit, with the number of WPP shares on loan rising just as the wider FTSE100 experiences a decline in such trades.
This process of ‘shorting’ or 'short selling’ sees investors borrow shares for a fee and selling them on with the intention of subsequently buying them back more cheaply at a later date and handing the shares back to their original owner.
It is estimated that there are now around 81m WPP shares on loan, equivalent to around £1bn based on its current share price with Marshall Wace and Old Mutual Global Investors amongst those actively shorting the ad giant.
WPP has seen its market value slashed by £5.6bn over the past year as it is buffeted by the perfect storm of Sorrell’s exit, a wider advertising downturn and increased competition from the likes of Google and Facebook.
Last week, Sorrell told The Drum at an exclusive event in Cannes that the long-term succession plan was for the current chief operating officers Mark Read and Andrew Scott to take the reigns, a plan he still supports.
Sorrell heaped further pressure on his own creation last month when he announced plans to form a new global communications firm called S4 Capital, with heavy backing from institutional investors.
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