Short sellers circle Kier Group as contractor’s turmoil continues
Five hedge funds have raised their bets against Kier Group in the last month to make the troubled contractor the most-shorted stock on the market.
Funds including Blackrock, Marshall Wace and Kuvari Partners hold a combined 10.9 per cent of Kier’s stock, according to regulatory filings.
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This is worth around £12.9m after Kier shares fell another 12.7 per cent today.
The short position has soared from 4.8 per cent in May.
Kier has suffered a torrid month after announcing in June it would cut 1,200 jobs in an attempt to cut costs. The move followed a series of profit warnings in the first half of 2019.
Neil Woodford, the veteran investor who was recently forced to suspend his struggling Equity Income fund, earlier this year spearheaded a move to oust then-Kier chief executive Haydn Mursell.
However, he cut his stake in the company last week, in a sign the firm is losing the support of even one of its largest shareholders.
Investors short stocks when they believe a company’s share price is likely to fall, borrowing the stock and selling the shares, with the intention of buying them back at a lower price to make profit.
Read more: Kier shares plunge as ‘accounting error’ reveals higher net debt than previously thought
Despite Kier’s recent turmoil the hedge fund’s short positions mean they think its share price will continue to tumble.
Hedge funds may be shorting the stocks on the basis that “Woodford could be a forced seller,” said AJ Bell investment director Russ Mould. “Financial markets can be very cruel things.”
Main image: Kier Group