A trader told the Guardian, “it’s a bloodbath out there. The hedgies have dumped their holdings and some of them will be nursing big losses.”
Which stock is that trader talking about? BSkyB.
Two weeks ago, investors were awaiting a massive spike in the share price, sure that a deal with News Corp was imminent.
In the wake of the News of the World scandal, the buyout is off.
“Short-term speculators expected to make a killing by investing in a company viewed as a prime bid target, but instead have seen shares in the satellite television company plunge,” according to the Guardian.
Losses aren’t great, but it’s hardly a bloodbath.
While they may “run into millions,” we’ve seen way worse. Last month, for example, some hedge funds lost hundreds of millions of dollars, when commodities crashed. John Paulson lost hundreds of millions on his Sino-Forest bet, as did other money managers.
“The biggest shareholders in BSkyB are institutions such as Capital Research & Management, BlackRock and Fidelity,” the Guardian reported.
But hedge fund Perry Capital owns a stake of 1.1% and could be sitting on paper losses that run into millions if it acquired the stock at above current levels.
Several big American hedge funds have reduced their positions in BSkyB… Taconic Capital Advisors and Davidson Kempner European Partners LLP have been net sellers. The British hedge fund millionaire Crispin Odey… sold some of his 2.4% holding last week, but has topped it up again. However, the continuing decline in BSkyB’s share price means Odey’s paper loss is estimated to exceed £3m.
By comparison, those losses seem minuscule compared to what hedge funds have lost in the wake of oil nosediving, silver crashing and the Japanese tsunami and nuclear fallout.
News Corp shares are down about 10% since the News of the World scandal exploded.