One of the hedge funds best-known for short selling is closing its main fund and moving away from the practice.
London-based Lansdowne Partners is set to shut down its $2.8bn (£2.2bn, €2.5bn) Lansdowne Developed Markets Fund, as first reported by Institutional Investor.
The decision would mark a sorry end for what was once one of the most internationally well-known equity long/short hedge funds.
The fund was unable to profit from the Covid-19 market plunge, falling by 13 per cent in March, its largest monthly drop in its nearly 20-year history.
Nor was it able to benefit from the government and central bank assisted market recovery of recent months. By June, the fund’s assets under management had sunk to $9.8bn, a far cry from its $22bn peak.
A person familiar with the firm told Bloomberg that investors had been told that it had become harder to make money from short selling and that the fund was “finding more opportunities in long bets and investment in early-stage companies”.
Investors have reportedly been encouraged to consider the Lansdowne Developed Markets Long Only Fund or the new LDM Opportunities Fund, which focuses on young companies.
With 55 per cent of its assets under management in these long pools at the start of March, it is clear that Lansdowne’s focus was already shifting focus. However, the Covid-19 pandemic could be said to have accelerated this trend.
With central banks and governments bolstering markets to such record degrees, short selling becomes harder and harder. Yet the recent Wirecard scandal shows that the practice can still prove profitable. Short sellers are thought to have made more than $2.6bn from the collapse of the German fintech wunderkind last month.
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July 07, 2020 at 10:28PM
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Prominent short seller to shut down main hedge fund - Capital.com
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