Talvivaara Mining Company Plc (LON:TALV) (HEL:TLV1V) (FRA:TM7) a Finnish mining company, has been getting some serious attention from hedge funds profiting on their short positions.
In one trading session, Talvivaara Mining Company Plc (LON:TALV) lost 64 percent of its market value, plummeting from 93.25 pence to 31 pence on the March 11. It gets worse, Talvivaara is now down to 14 pence today and has lost 86 percent of its market cap YTD which means that from 1.95 billion pounds, it is down to 269 million today.
The nickel miner has been bogged down by scarce funding and virtually no assets to payoff on its contracts. Even the rescue fundraising of 227 million pounds is considered insufficient by the bears.
Talvivaara Mining Company Plc (LON:TALV) (HEL:TLV1V) (FRA:TM7) has also suffered through a toxic leak at one of its mines last year. The miner’s production base underwent a major downturn, from 16087 tons of nickel in 2011 to 12916 tons in 2012.
Now turning to the hedge funds who have juiced massive profits on paper from this destructive stock are Sothic Capital Management, Magnetar Financial and Polygon Global Investors. The largest short bet and probably the most profitable was placed by Sothic Capital which amounts to 2.1 percent of equity and was initiated back in December 2012 at 1.52 percent of outstanding shares. Roughly, Sothic Capital’s investment has returned 85 percent through the period of short holding.
Sothic Capital is up 5.81 percent in the first quarter of this year, and short Talvivaara equity/ long corporate debt was the fund’s star performer in March. Sothic Capital has several other shorts in eurozone. The fund favors hedging long positions in bonds against short equity and is involved in opportunistic trades in mining, alternative energy and shipping.
To see the full list of Sothic Capital’s short positions across Europe, visit Hedge Fund Short Positions In Europe.
Magnetar Financial initiated a short position just last week which is equal to 0.51 percent of outstanding shares. Polygon Global has held a short bet since last year which is now equal to 1.2 percent of the total shares.