Odey Asset Management has taken a short position against Deliveroo after a disastrous start to the delivery firm’s London IPO.
Odey fund managers James Hanbury and Jamie Grimston took the bet on Deliveroo’s first day of trading, according to investor documents seen by the Financial Times.
Deliveroo made its debut on 31 March with a 390p offer price before plunging as much as 30 per cent, wiping £2bn off its valuation. Shares have continued to fall and is now trading at around 227p.
Advisers claimed the sharp dip in the price was a result of short-sellers, which borrow stocks and sell in the hope of profiting from a drop in price. They claimed at least three hedge funds had taken an early short position.
Will Rhind, founder of ETF provider Granite Shares, said it’s still too early to tell how many firms have taken positions but it’s likely a number of firms have shorted Deliveroo. “It being a big stock means you’re going to attract more interest from professional short-sellers,” he said.
It’s unclear the size of Odey’s position but it has not been disclosed in regulatory filings meaning it’s likely to be below the 0.5 per cent disclosure threshold.
Hanbury and Grimston said markets are in an “extreme environment”. Low interest rates, increased interest in retail investing, and a “box-ticking” approach to sustainability have “created some bubble valuations”.
In a recent trading update Deliveroo conceded its gross transaction value is likely to slow in a post-pandemic world. “It is difficult to say how much of this growth has been driven by the special circumstances of the current lockdown restrictions in some of our markets,” the firm said earlier this month.