Asos hit by “dark destroyer” short seller
Struggling online retailer Asos has been hit by a big short attack from the hedge fund Shadowfall as it attempts to recapture its pandemic-era lustre.
Matthew Earl, head of investment firm Shadowfall, nicknamed the “dark destroyer”, has built a short position in Asos worth about £4m, the Sunday Times reported.
Asos is the second most shorted stock in the FTSE 250 with 10.98 per cent of its shares on loan according to S&P Global Market Intelligence.
Short selling is when an investor buys shares and then sells them on the market with the intention of buying them back later for less money. Short sellers bet on, and profit from, a drop in the share price.
Shadowfall has previously attracted attention for attacking the fraudulent payment processor Wirecard which imploded in 2020. Other hedge funds with short positions against Asos include Citadel Advisors and Marshall Wace.
Fast fashion firms like Asos have fallen out of favour in recent months with the failure to convert lockdown-era growth into post-pandemic profitability.
Shares in the retailer have fallen over 44 per cent in the last year, bringing its market capitalisation to around £780m.
In October last year, Asos posted a £32m annual loss with cash-strapped consumers cutting back spending and returning more online orders.
Since then, Asos has been attempting to significantly restructure under a turnaround plan called ‘Driving Change’. It said it was looking to slash 100 jobs in 2022 in a cost-cutting exercise.
However, in January it reported that sales had slipped in the four months to December with analysts warning the firm had a “mountain to climb”.
In February, Asos brought in the “highly experienced” Sean Glithero as interim CFO. The company also said it had hired three quarters of its new 12-person decision-making team.
Asos declined to comment.