Two of the world’s biggest hedge funds are expected to have reaped windfalls by betting against shares of Close Brothers ahead of their sharp fall this week and the scrapping of the merchant bank’s dividend.
Marshall Wace and Millennium both have significant short positions in Close Brothers’ stock, filings with the Financial Conduct Authority show.
“Shorting” is a technique enabling funds to profit from falling stock prices. Shares in the FTSE 250 merchant bank have slumped by about 60 per cent since January 11, when the FCA revealed an inquiry into the car loans market. A fifth of Close Brothers’ loan book, about £1.95 billion, is in motor finance and investors fear that the regulator’s intervention could result in the bank being forced to pay