The UK hedge fund Odey Asset Management has taken a short position of about $5 million against Manchester United shares in anticipation of cashing in when they buy the stock back at a lower price, The Financial Times said on December 12, 2013.
Odey Asset Management strategy is to buy Manchester United shares using borrowed money, then sell them at a peak price, wait for the depreciation, and finally buy them back. The newspaper said the hedge fund invested about $5 billion in this scheme. The stake of Odey Asset Management is estimated at $310,000 or less than 1% of total shares of Manchester United.
The same scheme is used by New York hedge fund Tremblant Capital. It owns 0.81% of the stock. Both hedge funds bet against the market trend. Today, only 6% of the Manchester United shares are short sold.
Manchester United made its initial public offering on the New York Stock Exchange in August 2012. It priced its IPO at $14 per share; further shares rose to $17. The total number of shares traded on the exchange is 16.7 million. The majority shareholder is the Glazer family. At its IPO price, Manchester United held a market capitalization of nearly $2.3 billion. As of December 12, 2012, the price of the share of the soccer team was $16.8.
