Carillions more? Hedge funds stick to their guns and back further losses

Oliver Gill
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Controversial High Speed Rail Link Given Government Approval
Carillion has been selected as a contractor to deliver the government’s High Speed 2 network (Source: Getty)

Hedge funds betting against fortunes stricken Carillion have refused to budge, gambling on a further deterioration of the firm’s share price.

Some 28 per cent of Carillion’s stock is on loan to short sellers, according to data from IHS Markit. Last week the figure stood at 29 per cent.

Today, shares in Carillion ended the day 15 per cent higher. They were boosted by news it was had been selected to deliver the government’s High Speed 2 network and securing the services of accountants EY as it grapples to get on top of its finances.

Read more: Hedgies bag £80m on Carillion crash

Hedge funds could be staring down the barrel of aggregate losses in excess of £10m as a result of today's revitalised share price.

Carillion shares ended last week around 70 per cent lower. One hedge fund source told City A.M. such a fall would normally be “job done” for those betting against the stock.

However, IHS Markit figures indicate there are many funds thinking the stock has further to fall.

In addition, the cost of lending the stock has risen from around two per cent to five per cent, suggesting an increased demand from institutional investors wanting to borrow shares order to bet against them.

Read more: HS2 says it sought assurances from Carillion's partners over contract award

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