Denmark does not get much attention from hedge funds, but several bigwigs of the U.S money management industry are betting against a small cap Danish company. FLSmidth & Co. A/S (CPH:FLS), which does business in the construction industry, has roughly 9% of its shares held in short positions. Some famous hedge fund managers have taken to betting against the company. David Einhorn, D.E. Shaw, Cliff Asness and Marshall Wace have all maintained short interest in the engineering servicer.
Lansdowne hawks on mining transportation
The company drives a major chunk of its revenue from the mining industry as it provides transportation services to the sector as well as other solutions. FLSmidth reported a 22% drop in new orders in 1Q2013, and profits fell a whopping 86% in the same period. If its own troubled outlook was not enough, when a Swedish industrial, Sandvik AB (OTCMKTS:SDVKY) (STO:SAND), reported a 33% decline in Q2 profits last week, FLSmidth & Co. A/S (CPH:FLS)’s shares also fell in response. Sandvik referred to lower demand from mining industry as the principal reason for reduced profits. Sandvik, which is the largest provider of metal cutting solutions, also suffered in earnings due to adverse forex rates. According to Bloomberg, analysts at Nordea Bank have said that Sandvik’s earnings show how suppliers of mining industry are vulnerable and hence they also see FLSmidth at risk.
FLSmidth & Co. A/S (CPH:FLS) has dropeed 16% for the year after closing down 3.5% today. The largest short bet has been placed by Einhorn’s Greenlight Capital at 2.6% of outstanding shares.
Lansdowne, Viking up in shorts
Sandvik AB (OTCMKTS:SDVKY) (STO:SAND) was a timely short bet of none other than Lansdowne Partners and more recently Andreas Halvorsen’s Viking Global. Halvorsen, who seems to have loaded his bear guns on China, said in his second quarter letter that his firm is focusing on short plays and other investments that can benefit from weakening growth in China. Earlier he also disclosed a short in KONE Corporation (HEL:KNEBV), a Finnish escalator maker with considerable exposure to China’s construction sector. Viking Global disclosed the short in the first week of July, whereas Lansdowne has been in it since last December.
Sandvik AB (OTCMKTS:SDVKY) (STO:SAND) is down 21% for the year, yet the bulk of the decline took place in last two months.
Mining industry has been a hot sector among short sellers for quite some time now. The industrial slowdown in China combined with the decline of gold in past months has brought several major miners to their knees.
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