- UK investment star Neil Woodford stunned investors after saying heavy withdrawals in his Equity Income Fund meant that he would halt redemptions.
- Short sellers including Marshall Wace and AQR Capital Management are making big bets against companies linked to the scandal.
- "We estimate just above £1 billion [about $1.3 billion] at work against reported holdings of Woodford Investment Management," said short-selling research firm Breakout Point.
The shock fall from grace last week of UK’s most famous investment manager is still rippling through markets, with short sellers including Marshall Wace and AQR Capital Management making big bets against companies linked to the scandal.
Neil Woodford stunned investors after saying heavy withdrawals in his Equity Income Fund meant that he would halt redemptions, freezing out clients from getting back their money.
Marshall Wace, AQR, and a UK hedge fund Lansdowne Partners are among those putting big shorts against Hargreaves Lansdown, a big backer of Woodford’s fund. (The Lansdowne/Lansdown names in the funds are not linked.)
Some have expressed worry that Hargreaves Lansdown could follow Woodford and also end up halting withdrawals.
The hedge funds have each put short bets worth more than 0.5% of the UK’s stockbroking juggernaut. CityWire has reported that about £1.4 billion of Hargreaves Lansdown clients’ money was invested in Woodford’s fund as of last year.
Lansdowne Partners’ bet is worth about £51 million, Marshall Wace’s is worth about £56 million, and AQR’s is worth about £101 million.
And those are the bets just against Hargreaves Lansdown.
"We estimate just above £1 billion [about $1.3 billion] at work against reported holdings of Woodford Investment Management," said short-selling research firm Breakout Point. And that’s just counting "big" shorts, which Breakout Point defines as any bet making up 0.5% of the stock or higher.
Crispin Odey’s Odey Asset Management put a 0.5% bet on NewRiver, a real estate investment trust that Woodford just sold his stake in last week. George Soros’ Soros Fund Management has been shorting NewRiver since January of 2018.
The research firm noticed what it called the first ever big short in Burford, another of Woodford’s holdings, last week — a 0.5% bearish position by Gladstone Capital Management. That, despite the Financial Times’ Lex column saying the litigation funding business was one call that Woodford may have got right.
"There are many others," Breakout Point said in an email, adding that it has spotted bets against Woodford-linked stocks including Kier, IP Group, Stobart, and Crest Nicholson.
Marshall Wace and Hargreaves Lansdown declined to comment. Business Insider has reached out to Lansdowne Partners, AQR, Gladstone, and Odey Asset Management.
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