(Corrects paragraph 5 after Breakout Point says 9, not 8, short-sellers face potential losses of about 101 mln pounds)
By Nell Mackenzie
LONDON (Reuters) -Global hedge funds including Man Group and AQR Capital Management faced potential losses on their bets against Ocado after the online grocer’s stock price surged on Thursday, said data and research group Breakout Point.
Ocado shares soared by over 40% on Thursday after The Times newspaper reported speculation of possible bid interest by U.S. suitors, including Amazon, in the company, which has been squeezed by a cost of living crisis in Britain.
Ocado declined to comment on either the stock’s rise or the Times report. Amazon also declined to comment on the report.
“It seems that Ocado’s short sellers received an unexpected grocery delivery full of rotten tomatoes today,” said Ivan Ćosović, founder of Breakout Point.
Based on regulatory short disclosures, the data company estimated that nine short-sellers had trades facing a total potential loss of about 101 million pounds ($128.88 million) on Thursday.
“However, most of these shorts have been around for a while now, so in spite of today’s jump, many of big shorts seem to be still doing just fine on a long enough timeline,” said Ćosović.
Among funds on the list with regulatory short disclosures are several well-known names such as AHL Partners, which is part of hedge fund Man Group, AQR Capital Management, BlackRock Investment Management, D1 Capital Partners, Gladstone Capital Management, Kintbury Capital, Systematica Investments, Varenne Capital Partners and Whale Rock Capital Management.
Varenne Capital said its position remained profitable as it had been in place for many quarters.
“We find it hard to believe Amazon (is) buying Ocado as Kroger is one of Ocado’s largest shareholders and clients,” said Varenne Capital Partners CEO Giuseppe Perrone.
U.S.-based Kroger Co is one of Amazon’s direct competitors and as a major Ocado shareholder, would have to approve any deal.
Blackrock, Man Group, AQR, Gladstone Capital and Systematica Investments declined to comment while D1 Capital, Kintbury and Whale Rock did not immediately respond to requests for comment.
Sometimes, short bets that a stock price will fall can be one small part of a way a hedge fund is positioned on a stock. Therefore, regulated disclosures may not provide the entire picture of their profits and losses.
Retail trading reaction to the stock price move was mixed, said Ćosović.
Shares in Ocado rose as much as 46.7% and were briefly on track for their biggest one-day jump on record. They were last up 35%, paring losses over the past 12 months to 26%.
($1 = 0.7837 pounds)
(Reporting by Nell Mackenzie; Editing by Emelia Sithole-Matarise)
