Odey Asset Management has taken a short position against Deliveroo in the first evidence of hedge funds betting against the food delivery group’s shares, the Financial Times reported.
The bet was taken by fund managers James Hanbury and Jamie Grimston, apparently on the day of Deliveroo’s listing, investor documents seen by the FT showed. Odey is run by Crispin Odey, one of the UK’s most prominent hedge fund managers.
The size of Odey’s short position is not clear but it has not been publicly disclosed and is therefore likely to be less than 0.5%. That would make it only a contributory factor in the dire performance of Deliveroo’s shares since its first day of trading on 31 March.
Short sellers bet against a company by borrowing shares and selling them in the hope of buying the shares back for less after the price drops. The FT said market data showed low levels of stock lending for Deliveroo on 31 March and the following days.
The company’s stock lost more than a quarter of its value on its debut. Confidence in the company was shredded in the run-up to the IPO as big investors pulled out on concerns about a high valuation, corporate governance and a gig economy business model.
Advisers to the company said at least three hedge funds took short positions straight after the float, which has been described as “the worst IPO in London’s history”.
The shares fell 0.9% to 231p at 12:18 BST on Thursday – 40% less than the 390p IPO price which was at the bottom of the mooted range.
Deliveroo disappointed investors a week ago by leaving guidance unchanged and flagging a slowing growth rate as lockdowns ease and people return to restaurants. Commentators said after the hype of its IPO the company might have learnt to dampen expectations.