Hedge fund bets against Flutter continue to mount
Nine hedge funds now short approximately 7.8% of Flutter shares
Hedge funds continue to bet against Flutter Entertainment, with the Paddy Power Betfair (PPB) owner one of the most shorted companies in the UK.
EGR reported in October on a surge in short positions taken by hedge funds following the planned takeover of The Stars Group (TSG), with 4.9% of the stock out on loan.
However, that number has since risen even further, with nine hedge funds in total shorting 7.8% of the stock.
For comparison, Thomas Cook and Debenhams are two of the three most shorted stocks in the UK market with 10.7% of their shares on loan.
Sand Grove Capital Management LLP had the biggest position against Flutter at 1.23% of the shares.
Simon Davies, an analyst at Deutsche Bank, said traders were likely making an arbitrage play, going long Stars Group and short Flutter to take advantage of the value discrepancy when the shares are combined.
Another city analyst noted the strategy came with the risk of the deal falling through, adding: “People could also short Flutter just because they think the acquisition will go down.”
The deal is expected to be completed in Q2 or Q3 next year according to TSG.
Flutter shares were trading at 8,352p on the London Stock Exchange at the time of writing, up slightly from the price when the deal was announced.