Hedge funds profit from AstraZeneca fall, but FTSE short sellers face continued challenges in 2021

Financial data

Hedge funds have made gains from bets against AstraZeneca and GlaxoSmithKline in recent weeks – but bearish managers lost more than USD600 million on FTSE 100 shorts at the end of the year, with short sellers facing continuing “unpredictable swings” in 2021.

Short positions in AstraZeneca – whose Covid-19 vaccine developed alongside Oxford University began rolling out in the UK this week – brought in almost GBP13 million for bearish hedge funds during December as the drug giant’s share price tumbled last month.

New data from Ortex Analytics also shows negative positions in GlaxoSmithKline generated more than GBP4.5 million for hedge funds in December.

However, hedge fund short sellers ultimately took a GBP460 million (US620 million) hit on FTSE 100 positions at the end of 2020, the London-based equity research firm said on Wednesday.

Negative wagers against mining giants BHP Group and Rio Tinto Group came unstuck in December, as the iron price surge brought cumulative losses of more than GBP243 million for bearish managers.

Contrarian positions also lost more than GBP20 million in both Rio Tinto and Just Eat Takeaway last month.

The most profitable FTSE 100 short bet in December proved to be HSBC, whose woes brought in some GBP28.2 million for hedge funds. The banking giant also proved to be most profitable short over the course of 2020, netting GBP671.1 million for short sellers last year.

Meanwhile, hedge funds betting against Rolls Royce have made more than GBP550 million over the last 12 months.

Peter Hillerberg, co-founder of Ortex Analytics, warned hedge fund short sellers to “brace themselves” for further frenzied moves in markets this year.

“December epitomises what a challenging year it’s been for short sellers. Defined by huge and unpredictable swings from profit to loss, it has undoubtedly been the most challenging year the industry has ever faced,” Hillerberg said on Wednesday.

“Unfortunately, short sellers must brace themselves for this to continue into the first half of 2021, as we remain under the shadow of the pandemic.”