A top hedge fund just backed Plus500 despite its account freeze

Youths play pond hockey on the frozen Sturgeon Lake in the region of Kawartha Lakes, Ontario February 2, 2015. Hockey-mad Canadians are looking forward to one of the year's most anticipated televised events, CBC's REUTERS/Fred ThornhillThousands of trading accounts have been frozen

One of the world’s most famous hedge funds has backed spreadbetting firm Plus500, despite the company’s share pricecollapsing 45% in the last two days.

Filings show that $US13.2 billion (£8.54 billion) hedge fund Odey Asset Management, headed by Crispin Odey who was briefly married to Rupert Murdoch’s eldest daughter, yesterday bought around 1.6 million more shares in Plus500, taking its stake in the business to 14%.

The purchase came the same day as Plus500’s shares nosedived, after the company said around 55% of UK accounts had been frozen.

The company blamed “human error,” saying some documents scanned as part of anti-money laundering checks were unreadable. As a result it was having to asking for more documents from customers to be sure of their identities.

One analyst today estimated that the freeze could cost the company £25 million ($US38.66 million) in lost revenue on top of the more than £300 million ($US463.86 million) already wiped off its market value.

Odey Asset Management’s purchase looks like a vote of faith in the business despite its problems. The fund may have thought yesterday’s price dive was a good opportunity to top up on shares at a knock-down bargain.

We’ve reached out to Odey Asset Management for comment on why it upped its stake but it had not responded with a comment at the time of publication. This is unsurprising, though, as hedge funds are typically highly secretive.

NOW WATCH: We got our hands on ‘Kinder Surprise Eggs’ — the global candy favourite that’s still illegal in the US

NOW WATCH: Money & Markets videos

Want to read a more in-depth view on the trends influencing Australian business and the global economy? BI / Research is designed to help executives and industry leaders understand the major challenges and opportunities for industry, technology, strategy and the economy in the future. Sign up for free at research.businessinsider.com.au.