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D.E. Shaw disclosed a new short in Fiat SpA (BIT:F) (OTCMKTS:FIATY), the Italian auto brand that owns the Ferrari models. Earlier we broke news that Jim Chanos had a short position in the Italian car maker after he disclosed that he is bearish on some European auto companies. D.E. Shaw’s position is small, and the hedge fund is shorting 0.5% of Fiat.
Lansdowne bets against Adidas
Germany is seeing some activity, and by that I mean activity unrelated to a naked man dancing for hours in Angela Merkel’s private jet, beacause that one is gold. Two of Europe’s largest hedge funds have initiated new short positions in notable German companies in the last week. Lansdowne Partners, with $12.2 billion under management, disclosed a new short bet in adidas AG (ETR:ADS), the apparel and footwear company.
While Lansdowne has a large number of shorts disclosed in European companies, many of which have a considerable market cap, the reason we pay attention when Lansdowne shorts something is because their short calls rarely underperform for the fund.
Adidas revises earnings forecast down
The 0.51% short in adidas AG (ETR:ADS) (FRA:ADS) disclosed on Aug 16, will amount to $119 million. Shares of the German company have gained 23% YTD. Lansdowne’s short bet comes after the the company reported first half earnings on August 8 and slashed its earnings forecast for FY2013. The company posted a 4% increase in earnings which amounted to $231 million whereas revenue declined by 3.8% to $4,54 billion. Morgan Stanley’s Ronan Carr noted in their latest edition of weekly European Equity Strategy that adidas is very popular, expensive and has high expectations but has a history of poor earning revisions and a negative and falling earnings revision ratio.
Analysts noted that adidas is an over-hyped stock and questioned if it was running out of steam. Other equities that were pooled in this category are EADS NV (EPA:EAD), United Internet AG (ETR:UTDI) (FRA:UTDI) and Iliad SA (EPA:ILD).
Marshall Wace bets against ThyssenKrupp
Marshall Wace, another bigwig among European hedge funds with $10.7 billion under management, disclosed a new short of 0.55% in ThyssenKrupp AG (ETR:TKA) (FRA:TKA) just yesterday. ThyssenKrupp is a steel manufacturer and processor and also produces transportation systems, wind turbines and other heavy industrial equipment. Marshall Wace has bet against other steel and metal companies like SSAB AB (STO:SSAB-A) (STO:SSAB-B), Kazakhmys plc (LON:KAZ) (HKG:0847) and Petropavlovsk PLC (LON:POG).
ThyssenKrupp beat earnings estimates in Q2, the company reported $769 million in adjusted EBITDA, good sales in its European steel operations and in the elevator business. The company projected a $445 million in adjusted earnings for Q3 which was higher than the consensus forecast compiled by Bloomberg.
ThyseenKrupp troubled with delays on Steel Americas sale
Nomura International’s Ashraf Khan and Matthew Kates have a positive outlook on the German company whereas Societe Generale has a negative outlook on ThyssenKrupp. SocGen’s Philippe Landroit predicted that the Q2 earnings release of the company will not shed light on what is going on with the sale of its Steel Americas division.
SocGen said that the company is running behind schedule on the transaction as it was projected to complete in September. The note added, “We believe the transaction is being delayed by Steel Americas’ weak operating performance (negative FCF of EUR125m per quarter), Vale’s reluctance to incur more losses at CSA and CSN’s (the main bidder) desire to protect its balance sheet. “
Vale SA (ADR) (NYSE:VALE) has a 27% stake in one of the bidders, Brazilian based CSA, and therefore any transaction has to be approved by the majority stakeholder. ThyssenKrupp AG (ETR:TKA) (FRA:TKA) has lost 10.6% of its stock value in this year.