HEDGE funds have taken a substantial punt against the fortunes of FTSE 250 construction business Kier Group by betting the company’s shares will fall, a practice known as short selling.
More than 12 per cent of Kier’s stock is currently out on loan, up 297 per cent on the same time last month, according to data supplied to City A.M. by financial information services company Markit.
Shares in the company have shown little growth in recent years and according to official declarations funds such as Cheyne Capital Management, Polygon Global Partners and Sandell Asset Management have all taken hefty bets against the company’s fortunes within the last fortnight.
Short selling involves borrowing shares from a broker in the hope that a company’s share price will fall. If the price does drop then traders can buy back the shares at a lower price and profit from the difference.
Traders are continuing to target newsagents WH Smith, with hedge fund Fest NV shorting almost four per cent of the company’s stock. Home Retail Group, the owner of Argos, is also under attack.
In addition, Croda, Balfour Beatty and Thomas Cook have all seen a significant increase in the amount of their shares being used for short selling in the last month.
But hedge funds have eased off on home furnishings chain Carpetright after Lord Harris, the company’s founder, announced he would step back from day-to-day operations as part of a management re-jig.