Hedge funds are focusing on the oil & gas sector to open up new shorts in the UK Noted tiger cub, Lee Ainslie's Maverick Capital just initiated a brand new short in The Weir Group PLC (LON:WEIR), an engineering company that provides solutions for oil & gas and minerals industry.
Maverick Capital shorts WEIR
The company is a crowded short bet in UK with the largest short exposure, 12 percent of Weir's outstanding shares are held in short bets. Other than Maverick's 0.61 percent short bet, Lansdowne Partners, Steadfast Capital and Coatue Management have also bet against The Weir Group PLC (LON:WEIR). Lansdowne has the largest short position which is equal to 3.4 percent of Weir Group's outstanding shares.
The Weir Group PLC (LON:WEIR) has gained 15 percent in its shares YTD, however performance in the last month has been a little shaky. The company reported revenues of GBP2.5 billion in FY 2012, 10.7 percent above the previous year. Weir Group saw reduced orders in the first quarter of this year, down 14 percent on y-o-y basis. The company is facing constrained demand for its valves and pumps as the sector remains pressured due to clashes and instability in Middle East and reduced business in the U.S.
Eton Park Shorts Petrofac Ltd
Another company in the energy sector which was recently targeted by a famous US hedge fund is Petrofac Limited (LON:PFC). Eton Park disclosed a 0.6 percent short in the oil & gas explorer last week. Lansdowne Partners and AKO Capital have also bet against the company. This one has been a profitable short bet for hedge funds, shares are down 22 percent for the year. Petrofac Limited (LON:PFC) reported a revenue of $6.3 billion in last year, 9.7 percent above the earnings of 2011. Consensus analyst estimates for FY 2013 revenue are $6.5 billion.
Other short bets in this sector include Lansdowne Partners' negative positions in Ophir Energy Plc (LON:OPHR" target="_blank">LON:OPHR) and Tullow Oil plc (LON:TLW" target="_blank">LON:TLW). Hedge funds have also bet against Lamprell Plc (LON:LAM" target="_blank">LON:LAM), Ruspetro PLC (LON:RPO" target="_blank">LON:RPO) and Afren Plc (LON:AFR) which has exploring operations in Africa and Kurdistan.
An oil and gas shorting favorite, BowLeven PLC (LON:BLVN) was covered by the shortsellers. AQR Capital, Numeric Investors and TT International have covered their bets to below 0.5 percent in the past month. Oxford Asset Management still has a 0.9 percent short in BowLeven PLC (LON:BLVN). Shorts were covered as BowLeven slid in May and June, wiping out its YTD gains and turning out profits for shortsellers.
Follow Tabinda Hussain @tabihussain