An investment company in Sydney has earned $ 15 million on the short sale of shares in the troubled fund manager Magellan, after its share price and funds under management have been sent into free fall amid the continuing instability in management.
Tribeca Investment Partners senior portfolio manager Jun Bei Liu began short-selling Magellan shares, an investment tactic that pays off when stocks fall in value, in the middle of the year, when the ASX-listed company was valued at around $ 50 per share. shares.
Liu’s team, which has long and short positions in Australian equities, had noticed the relative underperformance of Magellan’s flagship Global Equity Fund and predicted that this would lead to lower fees and higher outflows, which would trigger investor sales.
Ms Liu said she had heard rumors of instability in Magellan’s management, but the short position was taken from the perspective that the company’s share value was overpriced relative to its earnings.
“We felt the performance was turning, the currents are not so strong, it’s too expensive – any surprises will definitely be on the downside,” Ms Liu said Aging and Sydney Morning Herald. “So when the events started unfolding, you’re really gathering further evidence that the stock price is going to struggle.”
Magellan’s stock price has dropped to around $ 14 per share. stock, the lowest point since late 2014, after a series of surprising announcements scared investors and customers. “It’s pretty sharp,” Liu said. “We made so much money on the short one.”
Ms Liu said it would take years before Magellan could turn things around and predicted the stock had not yet bottomed out as the company had not managed to rebuild market confidence.
“In fund management, it is a trust business. If you do not have that confidence, it is very difficult to maintain business momentum, ”she said. “They still want some followers, but many of them have lost faith. Even though the outflow is slowing down, a lot of money is still flying out the door every week.”