Hedge fund short sellers suffer as Cineworld’s shares surge

Cineworld

Hedge funds’ bearish bets against Cineworld suffered a dent this week as shares in the beleaguered London-listed global cinema chain – a long-standing target of short sellers - surged more than 9 per cent.

Polygon Global Partners have ramped up short positions in Cineworld in recent weeks, according to FCA regulatory disclosures.

AHL Partners, New Holland Capital, Whitebox Advisors, and Corvex Management are among the other hedge fund firms that have made negative wagers against the FTSE 250-listed firm lately. Earlier this year, high profile names Marshall Wace, BlackRock and Citadel Advisors were also betting that the troubled movie theatre operator’s share price would fall.

Cineworld has seen its share price trend upwards in recent weeks, rising from 83.38pp a month ago to around 117pp on Tuesday.

Its stock also soared during the GameStop saga in late January, as online amateur investors launched a co-ordinated push to drive up the prices of several companies heavily shorted by hedge funds.  At one point, the company’s share price was up some 15 per cent during the Reddit-driven frenzy.

Cineworld has taken a battering during the Covid-19 pandemic, registering a USD1.6 billion first-half loss last year as theatres were forced to close and big new releases were put on hold, pummeling revenues in the process.

The chain has long been among the most heavily-shorted publicly-traded UK stocks in recent years. Before Covid, bearish bets against the company centred around the broader structural challenges faced by the broader cinema sector, which faces a squeeze from an assortment of online streaming and home entertainment services.