Lansdowne Partners, the London-based hedge fund that perennially has the largest European short positions, has added to its short positions while Odey Asset Management took an interesting short in ArcelorMittal SA (ADR) (NYSE:MT) (AMS:MT).
Lansdowne not a grocery store fan
Lansdowne doesn’t like the supermarkets in Europe. The hedge fund, with over $17 billion in assets under management and a $4.7 billion short position in Europe, recently shorted Tesco Plc and Wm Morrison Supermarkets, a fact first reported Bloomberg Brief’s Hedge Fund Europe report, based on a mandatory filing.
Lansdowne established their short Tesco Corporation (NASDAQ:TESO) (LON:TSCO) position on May 28, taking less than a 1% stake in the firm with a $206 million position. Its short bet in Wm. Morrison, which was established one day later, was a $160 million bet the stock of the fourth largest grocery store chain in England would fall.
The price of both stocks have fallen in the short time Lansdowne has held the position, with Tesco Corporation (NASDAQ:TESO) (LON:TSCO) reporting its worst decline in domestic revenue in four decades with same store sales slipping by 3.8 percent, the report noted. While the decline in sales was expected, and impacted slightly when taxes are excluded, analysts weren’t impressed with meeting expectations to the downside. “Even though it’s a bit better than expected, the U.K. still looks pretty horrible, while overseas is only improving marginally,” Richard Marwood was quoted as saying. Marwood supervises nearly $700 billion in assets at Axa Investment Managers, including Tesco shares. “I’m not sure there is much in today’s report to advance the debate on how it will improve the business.”
Landsowne has a relatively large short portfolio, as previously noted.
Business strategy characterized as “bullshit” by former Morison’s chairman
After Lansdowne established their short position, former Wm. Morrison Supermarkets plc (LON:MRW) (OTCMKTS:MRWSY)’s Chairman Ken Morrison took existing Morrison CEO Dalton Phillips out to the woodshed on the current firm strategy. Spotlighted at the company’s highest profile investor event of the year, Morrison said the current strategy was “bullshit” at the annual meeting and called recent performance “disastrous.”
Both stocks had been sliding before the news and were propelled to the downside afterwards.
Odey partially short steel play through ArcelorMittal
The hedge fund with the second highest amount of short positions in Europe, Odey Asset Management, has established a $126 million short in ArcelorMittal SA (ADR) (NYSE:MT) (AMS:MT), according to research in the Bloomberg report. Novus’ European Short Observer notes that Odey, with a total short position of $1.8 billion, is balancing this short exposure across 33 positions.
As the world’s largest steel maker, ArcelorMittal SA (ADR) (NYSE:MT) (AMS:MT) is captive to a slowing demand in China and has engaged in a round of employee reductions and plant closures, and the firm is also exposed to the dropping price of iron ore.
Odey has had a tough year with a return of negative 7% in March, according to a letter sent to investors. An investor told ValueWalk that the value oriented hedge fund likely lost another 7% in April, as well.