Steve Cohen’s hedge fund has made bets against Schroders and Jupiter, the British-listed asset managers, as the UK’s investment industry contends with fallout from the Woodford crisis and fear of a no-deal Brexit.
Point72 took out a 0.51 per cent short position in Schroders, the UK’s second-largest listed fund manager, in late July, according to data from the UK financial regulator. The hedge fund extended the size of its short position in Jupiter to 1.23 per cent at the end of July.
The group, which was set up to oversee Mr Cohen’s fortune but opened up to outside money after the US markets regulator lifted a ban on the billionaire hedge fund boss in 2018, declined to comment.
But its decision to short Schroders comes at a time when the active fund industry faces scrutiny after Neil Woodford, the UK’s most celebrated stockpicker, was forced to suspend his £3.5bn Equity Income fund in June, sparking a fear of liquidity issues across the sector.
There is also growing concern that British asset managers will be hurt by a no-deal Brexit. Boris Johnson’s elevation to prime minister has lifted the chances of the UK leaving the EU without a deal, with concern that this could hit UK markets and hurt asset managers in the process.
Stuart Duncan, an analyst at Peel Hunt, the broker, said: “Asset managers are often proxies for general market exposure, as they tend to fall sharply if markets decline for whatever reason.
“For hedge funds, asset managers are often calls on general market direction [or] sentiment — that could be what has happened here.”
Hedge funds and asset managers including BlackRock, Odey Asset Management and Marshall Wace have also taken bets against Jupiter. According to IHS Markit, the data provider, 7.1 per cent of its stock is out on loan — a good indicator of short interest. This is down from 9.5 per cent in May but up from 6.2 per cent at the start of the year.
Some 4.2 per cent of Schroders stock was out on loan at the end of July, compared with 1.8 per cent at the start of the year, IHS Markit figures show.
Schroders and Jupiter declined to comment. The two asset managers reported half-year results this week. Schroders announced a 14 per cent drop in pre-tax profit for the six months to the end of June. The fund house reported a rise in assets under management to £444bn, despite suffering net outflows during the quarter.
Jupiter reported a 16 per cent fall in adjusted profits before tax but a rise in assets under management to £45.9bn, despite outflows.
Last year, Mr Cohen was blocked by the UK regulator from opening his multibillion-dollar fund to investors in the UK.
His former hedge fund, SAC Capital, pleaded guilty to insider trading in 2013 and paid a record $1.8bn in fines, while several of his portfolio managers were sentenced to prison terms. Mr Cohen was never personally charged with insider trading but was barred from supervising funds that managed outside money until 2018.
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