This London fund made a $113 million short bet on Renault before it tanked 14%

  • Merian Investors placed a bet on Renault’s shares falling on October 30, according to regulatory filings.
  • Renault’s shares dropped as much as 14% Monday after its CEO was arrested over financial misconduct allegations.

London-based Merian Investors, formerly Old Mutual Global Investors, made a sizeable bearish bet on Renault before the stock tumbled.

The fund placed a 0.51% short position on the French car company’s shares on October 30. Renault’s market cap was about €22.1 billion ($US25.3 billion) on that date, meaning the size of the position was around $US113 million.

Shares of the French car maker tanked following news that its CEO and Chairman Carlos Ghosn was arrested after Nissan outlined his “serious acts of misconduct.” Brazil-born Ghosn, 64, is accused of undereporting his salary at Nissan, where he served as chairman. He also held the chairman role at Mitsubishi as part of a strategic partnership between it, Renault, and Nissan.

Since October 30, makers of cars and auto parts have been the worst performing sector in the Stoxx Europe 600 Index, down about 2.6%, according to Bloomberg data. The auto industry has dragged on the overall index, due in part to fears surrounding global trade amid the US-China spat on tariffs.

Merian declined to comment on its trading positions.

Trade war fears have hit the automaker industry hard this year with Renault now down 33% for the year. The company lost $US2 billion from its market cap Monday.

Merian also has a 1.5% short position in French auto parts maker Valeo, according to Breakout Point data.

The chart below shows the rest of Merian’s short positions by industry:

Breakout Point Merian chartBreakout PointMerian Investors’ short positions by sector

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