Lansdowne sells out of entire £850m Goldman Sachs stake

Elizabeth Fournier
HEDGE fund Lansdowne Partners has sold its $850m (£517m), stake in Goldman Sachs, amid fears that increased regulation in the US could stunt the investment bank’s proprietary trading arm.

Lansdowne has sold almost 5m shares in Goldman – just under one per cent of the bank’s total share capital – having previously been one of its top twenty investors. The stake is almost 10 per cent of the $10bn funds Lansdowne has under management.

The last time Lansdowne sold shares in Goldman Sachs was in the months leading up to the collapse of Lehman Brothers in 2008, which precipitated the global banking crisis.

The move was apparently attributed to fears about the implementation by US regulators of the Volcker Rule, according to reports in the Sunday Telegraph. The new legislation will require banks to spin off certain proprietary investment practices, which could hit Goldman’s profits.

Last week, it was revealed that more than a dozen traders had quit Goldman’s US government bonds and derivatives trading desk in New York in recent months, as the bank takes fewer risks, and big bonuses for ambitious traders dry up.

Founded by ex-Schroders and Goldman Sachs banker Paul Ruddock (above) with Steven Heinz in 1998, Lansdowne Partners emerged during the financial crisis as an aggressive shortseller of UK financial stocks, making £50m shorting HBOS alone. The fund is also believed to be the second biggest shareholder in Lloyds Banking Group after the UK government, with an estimated stake of around four per cent, or £1.1bn. But with shares in Lloyds falling 30 per cent since the start of the year, the historically upbeat hedge fund has also suffered, with its UK fund down 12.2 per cent so far in 2011. Run by star managers Peter Davies and Stuart Roden, the UK fund is approaching its 10th anniversary.

Lansdowne used to be a key investor in Manchester United, but sold its 4.6 per cent stake to Malcolm Glazer for £31m in 2003, paving the way for his takeover of the club.