Construction giant Carillion's shares sink for third consecutive day

Oliver Gill
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A tower crane is pictured in central Lon
Carillion's shares have tanked this week (Source: Getty)

A pack of hedge funds betting against Carillion are holding their nerve as shares in the besieged contractor continue to tumble.

The construction giant’s stock fell a further 27 per cent yesterday following a 37 per cent fall on Monday and 31 per cent drop on Tuesday.

It means almost £600m has been wiped off Carillion’s market capitalisation since markets opened on Monday morning.

Read more: Carillion's shares are sinking yet again

Of the 18 hedge funds shorting the stock at the start of the week, only two – New York fund Engineers Gate and Hong Kong-based Kontiki Capital – have closed positions according to data lodged with the Financial Conduct Authority (FCA).

Meanwhile, Mayfair-based Kuvari joined the party, hoping to pick up further gains as the company’s share price falls.

Institutions taking out short positions, borrowing stock so they can bet its price will fall, must lodge them with the FCA on a daily basis.

Read more: Carillion's crash shows the value of studying the firms in which we invest

Of the 18 funds shorting Carillion at the start of the week 16 remain resolute and City A.M. analysis of the FCA figures indicates they will have booked £140m in this week alone.

Nearly a quarter of Carillion’s value is being used for the funds to bet against the firm.

Marshall Wace has the largest net short position across two separate funds, holding a 4.3 per cent position.

Investment giant BlackRock has more than three per cent while Thunderbird Partners slimmed its position from 3.2 per cent to 2.8 per cent.

Carillion’s steadily increasing debt pile, poor cash flow and a lack of leadership may cause “even the most daring of bulls” to think again, said Mike van Dulken, head of research at Accendo Markets.

Read more: From soup spoons to monsters: City analysts react to Carillion debacle

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