Lansdowne Partners, one of the biggest hedge funds based in UK, has some of the largest short disclosures in our database. The $12.4 billion hedge fund with focus on long/short equity strategy has gained well in the Q1 so far. The fund has a sizeable long exposure in the U.S., as of Dec. 31. Lansdowne Partners has over $6 billion invested in U.S. stocks. Lansdowne Partners’ Developed Markets Fund was down 0.35 percent for the month until April 12 and is up 7 percent YTD.
Lansdowne Partners was founded by Sir Paul Ruddock and Steven Heinz in 1998. Ruddock is the CEO of the firm while Heinz is the chief of European strategy. We track 27 of Lansdowne’s short positions in Europe, which in a rough estimate should easily exceed the value of $4 billion.
The eleven short positions discussed here make up a $3 billion short portfolio. Note that the value of positions is based on the market value of the company and is not adjusted with the date of disclosure.
Tesco PLC (PINK:TSCDF) (PINK:TSCDY) (LON:TSCO) (PINK:TSCDF) is a short bet of Lansdowne Partners. Lansdowne increased their short bet to 0.68 percent just last week and it roughly amounts to $308 million. Tesco is also likely a long standing short of the hedge fund as it was disclosed in Nov 2012. Tesco PLC (PINK:TSCDF)(PINK:TSCDY) (LON:TSCO) (PINK:TSCDF), a well known international retailer, has risen 15 percent since Lansdowne’s disclosure. Tesco had difficulties in posting profits in its U.S. operations, in the latest earnings, the company confirmed that it will exit the U.S. The retailer showed a 8.3 percent decline in its U.K. trading profits while the group trading profits declined 13 percent for the fiscal year ending on February.
Lansdowne Partners has short bets in other retailers as well, including a 1.44 percent position in J Sainsbury plc (PINK:JSAIY) (LON:SBRY) which amounts to $160 million and a 2.58 percent position in Wm. Morrison Supermarkets plc (LON:MRW) which is equivalent to $281 million.
Pearson PLC (NYSE:PSO) (LON:PSON), an international publisher and media company is also held as a short bet by Lansdowne Partners. With a net market value of $14.5 billion, Lansdowne’s bet is worth $88 million at 0.61 percent of Pearson’s outstanding shares.
Oil & Gas
Lansdowne has short positions in Petrofac Limited (LON:PFC), Tullow Oil plc (LON:TLW), The Weir Group PLC (LON:WEIR) and Ophir Energy Plc (LON:OPHR). Taken collectively these short bets have a value of $756 million. Lansdowne’s largest allocation is in The Weir Group PLC (LON:WEIR), where the 3.42 percent position is worth approximately $248 million according to the current market value of Weir. This position could not have generated profits for the hedge fund, as we know a couple of funds who have been gaining from their long positions in The Weir Group PLC (LON:WEIR) in Q1.
Air Liquide (EPA:AI) (PINK:AIQUY)
Lansdowne’s short in the gas engineering company Air Liquide (EPA:AI) (PINK:AIQUY) has been moved up to 0.82 percent of the company, which would have a value of $312 million. In recent years, Air Liquide has been expanding its business in both South and North America and emerging Asian economies. Recently the company said that the cheap shale gas in America and changing demand from China has forced the company to change its objectives; Air Liquide’s future strongly depends on how it handles these challenges. The primary headwind to the company’s future is its revenue generating capacity in Europe, which accounts for almost 50 percent of net sales, of which France alone accounts for more than 20 percent.
H & M Hennes & Mauritz AB (STO:HM-B)
H & M Hennes & Mauritz AB (STO:HM-B) is involved in the apparel business and has a market cap of $57 billion. The company is more commonly known by the brand H&M. Lansdowne’ Partners’ short in the company is so far profitable as shares have declined 3 percent since Jan 30 when the position was disclosed. At 0.5 percent of H & M Hennes & Mauritz’s outstanding shares, the short is equivalent to $291 million.
Sandvik AB (STO:SAND)
Sandvik AB (STO:SAND) is an Swedish engineering company which makes a wide range of tools and machinery. Lansdowne Partners has a short bet in 0.61 percent of the company which amounts to $222 million. The short was disclosed in December 2012, since then Sandvik AB is down 9 percent.
Atlas Copco AB (STO:ATCO-A) (STO:ATCO-B)
This one is again a short bet that exceeds the value of $250 million. Atlas Copco AB (STO:ATCO-A)(STO:ATCO-B) is also an engneering company, a manufacturer of compressors, mining tools, power tools and software products. The bet was disclosed in Nov 2012, so we are guessing that this was initiated well before the date of disclosure.
Amadeus IT Holding SA (PINK:AMADY) (MCE:AMS)
Lansdowne has bet $250 million against this Spanish IT solutions company which is specifically involved in providing technology solutions to the travel and tourism industry.
Prudential Financial Inc (NYSE:PRU) (LON:PRU)
Lansdowne Partners exited short in Prudential Financial Inc (NYSE:PRU) around mid-March. The fund incurred losses in the position which was held for four years according to Lansdowne’s investor letter obtained by Bloomberg. The fund believes that Prudential Financial, a U.K. based insurer, will have trouble sustaining its business in Asia and has doubts about its annuity business. However as Prudential refuses to decline and showed record profits for last fiscal year, Lansdowne decided to exit the position but still believe in their fundamental analysis of the company. The hedge fund’s highest recorded short position was 1.03 percent of Prudential Financial Inc (NYSE:PRU) (LON:PRU)’s outstanding shares on December 12, which would amount to $429 million based on the current market value of the company.