Sunday 23 February 2020 3:25 pm

Hedge funds bet against Ladbrokes owner GVC

Hedge fund tycoon Ken Griffin is building a bet against Ladbrokes owner GVC as it battles a potential increase in regulation.

Griffin, the founder of hedge fund Citadel, has taken an £80m bet against the bookmaker, as other traders also increased their positions, according to the Sunday Times.

Read more: Online growth offsets betting machine sales slump for Ladbrokes owner GVC

It has made GVC the FTSE 250 company with the biggest change in “short” positions so far this year. Reportedly 3.6 per cent of its shares, worth £180.2m, are out on loan to hedge funds.

UK bookmakers are facing a tide of regulation as the government cracks on the fixed-odds betting terminals, reducing the stake from £100 to £2.

Earlier this month the chief executive of the Gambling Commission Neil McArthur told the all-parliamentary group on gambling-related harm that a decision on a potential limit would be announced within six months.

Sign up to City A.M.’s Midday Update newsletter, delivered to your inbox every lunchtime

Other gambling firms have also come under attack from short-sellers recently. Paddy Power and Betfair owner Flutter has 7.5 per cent of its shares out on loan to hedge funds, while William Hill has 0.58 per cent out.

Shares in GVC have risen 800 per cent under Alexander’s leadership but investors have reportedly been unnerved by a recent series of governance mishaps.

Last March Alexander and chairman Lee Feldman sold £20m of shares in one day which drove its price down nearly 20 per cent. In July, the Sunday Times reported that GVC had sold its Turkish business to three men, one of whom Alexander knows.

A spokesperson for GVC said: “The company’s in a closed period but before that we’ve had a strong performance. Others in our sector have larger short positions. Numerous other listed companies have larger short positions. The short position in us hasn’t changed substantially in at least a month.”

“The level of short positions in our stock is unremarkable, especially compared to some industry peers. It’s not for us to comment on the possible motivations of short sellers, but we welcomed recent news that the German states have reached a compromise on future online gambling regulation, and we are engaged in regulator constructive dialogue with regulators in Germany and the UK.”

Get the news as it happens by following City A.M. on Twitter