- British hedge fund titan Crispin Odey’s fund may have lost millions on its short bets on German tech company Wirecard.
- Odey Asset Management held a 0.56% stake in Wirecard as of February 19, according to data from Breakout Point.
- Wirecard’s shares jumped more than 8% Wednesday after an announcement that SoftBank would be investing €900 million ($1 billion) in the company.
Short sellers in German tech company Wirecard will be cursing their luck after the company’s share price bounced following new investment from Japanese giant SoftBank.
Odey Asset Management, led by Brexit supporting hedge fund titan Crispin Odey, may be one of them. As of February 19, Odey Asset Management held a short position of 0.56% in Wirecard which amounted to approximately €83.2 million based on the German payment processor’s then share price of €120.25.
According to analysis from short selling research firm Breakout Point, Odey had held a position above 0.5% since January 30 and has increased and decreased its position subsequently.
SoftBank’s €900 million investment in Wirecard, reported late Tuesday, has since sent its shares soaring to €134.15 Wednesday, an 8.7% gain.
While Odey Asset Management may have exited some or all of its short position in Wirecard since February 19, if it still held 0.56% it would have lost approximately €10 million based on Wirecard’s current share price.
It’s unclear whether Odey still held the position as of Wednesday. Odey Asset Management declined to comment.
The fund holds around 20 shorts on European companies at present, according to data from Breakout Point.
Wirecard shares had been plunging in recent months following reporting in the Financial Times which highlighted alleged accounting discrepancies in the company’s Singapore offices.
The publication said that Wirecard’s management may have used false contracts, possibly to inflate revenue. The company has denied the claims.
Wirecard has subsequently taken legal action against the Financial Times after it recently filed a complaint in a Munich court.
A ban on short selling was put in place by the German financial regulator as the company began to attract the interest of short-sellers as a result of the reporting.
The global ban prohibited investors from taking new short positions on Wirecard or increasing existing ones. In February, the noted short-seller Fahmi Quadir of Safkhet Capital strongly criticized the ban in an open letter to the regulator.
Another hedge fund, Slate Capital, held a 1.5% short position in in Wirecard as of February 12, which could mean an even larger loss (approximately €65 million) for that fund, according to Breakout Point data.
Odey, the founder of Odey Asset Management, made headlines in the aftermath of Britain’s initial vote to leave the EU after making a reported £110 million from short bets placed against the pound in the run up to the referendum.
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Source: Business Insider – cburroughs@businessinsider.com (Callum Burroughs)