G4S plc (LON:GFS) (OTCMKTS:GFSZY), one of the world’s largest security solutions provider, has become the latest tug of war among hedge funds in London. The title was previously held by Ocado Group plc (LON:OCDO) (OTCMKTS:OCDGF), where hedge funds were betting both on the long and short side of the company, but shorts fizzled after Ocado surprised everyone with a 25 year partnership with a large U.K. retailer.
We have pointed out before how hedge funds were betting against Bill Gates by acquiring short positions in the stock. Marketfolly reports that Cevian Capital, an activist fund, has bought up a 5.1% position in the company. Cevian is an Anglo-Swedish fund according to Marketfolly. This comes after Bill and Melinda Gates Foundation and Cascade Investment acquired a 3.2% position in the company. Others who are bullish on G4S are Tweedy Browne which holds 5.06% of the company’s total voting rights, and the largest holder, Invesco Ltd. (NYSE:IVZ), with 16.04% of the company’s voting rights.
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Canaccord bullish on G4S
Canaccord Genuity’s Graham Brown said in a July note that the market is discounting the company’s new CEO Ashley Almanza’s ability to put greater focus on capital allocation and deleveraging of the balance sheet. He said that Almanza is focused on improving transparency of G4S plc (LON:GFS) (OTCMKTS:GFSZY) earnings and cash generation. He also said that the company’s stock is the most diversified in its sector and that “it enjoys number one or two positions in most of the markets in which it competes.”
Brown said that he expected the company to post revenue of $5.95 billion in revenue, excluding Olympics, EBITA at -8% or $328 million, EPS down 10% and net debt at $ 2.8 billion, in its Aug 28 mid-year release.
Hedge funds short G4S
At the same time, several funds are betting against G4S plc (LON:GFS) (OTCMKTS:GFSZY), and not just any funds, almost all of London’s noted equity long/short funds seem to have no faith in G4S’ performance. Net short positions disclosed to FCA are now equal to 4% of outstanding shares amounting to $199 million, up from 1.8% on June 28. One of the best performing hedge funds of the year, Odey Asset Management, has a 0.66% short in the company. Other notable bets against G4S are from Lansdowne Partners 0.7%, Egerton Capital 0.7%, Adelphi Capital 0.71% and AKO Capital 0.54% of outstanding shares.