Germany, the grand daddy of eurozone, has not been the best play for long short hedge funds. Most of the companies that have a high concentration of short positions have outperformed in terms of share price in this year. However, we were able to zero in on some good shorts which have been profitable for the hedge funds who made bets against the companies at the right time.
Hedge Funds Shorts In Europe
Take a look at all hedge fund short positions in Europe.
Hedge funds short IVG Immobilien AG
IVG Immobilien AG (ETR:IVG) (FRA:IVG), a real estate developer with business in eurozone and once the largest commercial developer, takes the crown and comes off as the best bet of shortsellers. After having a good couple of months at the start of 2013, the shares have tanked 83 percent YTD, wiping out $520 million from its market cap in this year alone.
IVG Immobilien AG (ETR:IVG) (FRA:IVG), now worth a flimsy $86 million, was worth $10 billion before EU was hit with debt crisis in 2008. IVG Immobilien AG (ETR:IVG) (FRA:IVG) seems set to lose more after it proposed offering up shares in return of its loan payments. The trouble real estate developer is attempting to refinance $3.9 billion in debt which is due at the end of this year with no means to finance it.
Coming to the hedge funds who have reaped the highest profits from shorts here, Oxford Asset Management, Barrington Wilshire and Highbridge Capital have been short IVG when shares traded higher and thus had the best bets. Sothic Capital Management and GLG Partners came in later but must have bagged at least half of the profits. IVG Immobilien AG (ETR:IVG) (FRA:IVG) was Sothic Capital’s (AUM $434 million) best performing position in April, in their monthly letter they said that the company was likely to default.
We have discussed the bearish winds hitting the semiconductor industry, most of them cyclical, as a result short interest in related ETF’s has piled up dramatically. Short interest in Market Vectors Semiconductor ETF (MUTF:SMH) has increased 243 percent since the December 31.
In Germany, Dialog Semiconductor plc (ETR:DLG) (FRA:DLG) is involved in making units for portable wireless devices and provides energy efficient solutions. The shares have slipped 10.5 percent YTD, bringing decent profits for famous names like GAM Investment, Cliff Asness’ AQR Capital and the lesser known Tremblant Capital.
The best bet here is by AQR Capital, which initiated the short in December 2012, since then the shares are down 13 percent. While Dialog Semiconductor plc (ETR:DLG) (FRA:DLG) may have done well for shortsellers, another German semiconductor solutions company AIXTRON SE (NASDAQ:AIXG) (ETR:AIXA) (FRA:AIXA), has done painfully for shorts. Shares are up 46 percent YTD, bringing losses for Maverick Capital, AQR Capital, Pennant Capital and several others.
Kloeckner & Co
The sad story of steel plays here. Kloeckner & Co SE (ETR:KCO) (FRA:KCO), a German distributor of steel in North American and European regions, has lost over 15 percent since March. However the shares are up for the year, as Kloeckner traded lower in in the first two months of 2o13. Kloeckner & Co SE (ETR:KCO) (FRA:KCO) is currently the short bet of Oxford Asset Management and Blackrock. AQR Capital and Highbridge have covered their positions.
Kloeckner & Co SE (ETR:KCO) (FRA:KCO) is restructuring itself to get through the reduced demand of steel products. The company is set to reduce 17 percent of its workforce and shut down 70 sites by the end of this year.
Praktiker Bau und Heimwerkermaerkte AG (ETR:PRA) (FRA:PRA), a retailer of do-it-yourself supplies is down 15 percent YTD. The company has not been targeted by many hedge funds, except for Sothic Capital and Barrington Wilshire.