One of Mayfair's most revered short sellers today took a multi-million-pound hit from Ocado's rocketing shares.
Marshall Wace, which made millions from the collapse of Carillion, has one of the largest punts against the online retailer.
With a net short position of one per cent, according to regulatory filings, Marshall Wace booked a paper loss of around £15m within minutes after Ocado shares rose 40 per cent this morning.
Some 9.5 per cent of Ocado's shares have been lent to hedge funds making bets against the firm, according to IHS Markit. This means such funds lost almost £150m between them following an announcement Ocado has signed a partnership with US supermarket chain Kroger.
Sloane Street-based Marshall Wace – founded by Sir Paul Marshall and Ian Wace – has also recently prospered betting against the likes of the AA and Provident Financial. Marshall was a vocal supporter of Brexit while previously also being one of the biggest backers of the Liberal Democrats.
While Ocado's share surge today burned hedge funds, short selling volumes stand at one-year lows – more than 20 per cent of the firm's stock was on loan around this time last year.
Marshall Wace has the third largest bet against Ocado and has reduced its position by almost two-thirds, compared with last June. The largest short is Atlanta-based GMT Capital (1.89 per cent) with Kairos Investment Management – controlled by Swiss private bank Julius Baer – holding a 1.51 per cent net short position.
"As one of the most shorted stocks in the UK stock market, this deal will be a poke in the eye for the hedge funds who have bet against Ocado because of its eye-watering valuation," said Hargreaves Lansdown senior analyst Laith Khalaf.
However, its share price is looking forward to future earnings based on licensing out its online delivery technology, rather than the revenues it’s currently making from food retail. The short sellers were hoping Ocado wouldn’t deliver on its international expansion plans, that position now looks like a badly busted flush.