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Hedge fund bets big against Flutter

Izzy Englander’s short stake is now equivalent to just over £410m worth of the company’s shares

Flutter counts Paddy Power among its many brands

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Cantillon
Tue May 21 2024 - 06:00

Israel “Izzy” Englander seems to grow more and more certain every week that Flutter’s share price is about to drop in value if the Central Bank’s register of short interest is anything to go by.

Englander is the founder of Millennium Management, a New York-based hedge fund which currently has more than $61 billion (€56 billion) in assets under management.

Millennium’s name began appearing alongside Flutter’s in the Central Bank’s short bet database in late April when the fund showed up as having a bet against roughly 0.50 per cent of the company’s shares.

If that sounds small it’s not. At Flutter’s share price at the time that was equivalent to £137 million (€160.3 million) worth of shares, which at the time had fallen from around £174 in March to just under £150 at that point in April.

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Since then Flutter’s shares have rallied to a recent high of nearly £166 per share, but Englander’s firm’s conviction has apparently grown as well. Over the same time period the short trade database shows his interest growing incrementally in time to the current position of 1.41 per cent of Flutter’s shares. That’s equivalent to just over £410 million worth of the company’s shares. (The increase in value is in part because of the rise in share price.)

A short trade is a risky bet in which a trader borrows shares from a broker, sells them on the market, and then waits for the share price to fall. If the price falls they can use the money to buy the now cheaper shares and pocket the difference.

So risky are such bets that companies and funds have to adhere to much higher rules of disclosure than normal equity investments. After all if the shares rise in value the trader is forced to make up their difference themselves, and there’s many a hedge fund that has been caught on the wrong side of a short trade and been forced to dig deep to cover its losses.

Of course, it’s not always possible to discern a hedge fund’s full strategy by way of a single regulatory disclosure. It may be that the bet is part of some wider strategy that the trader is not inclined to explain or publicise.

Even so, given the increase in the size of those disclosed short positions, Millennium seems to be strongly convinced that Flutter is heading for a dip in the near future.

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