Gladstone reducing short positions

Gladstone reducing short positions

TL; DR: Gladstone Capital has been reducing almost all of their EU big shorts in the past two weeks. This is in strong contrast to previous 3-4 months, during which we, almost exclusively, noted many increases in Gladstone's EU short positions portfolio*

Since September 6, we noted twenty short position reductions and no increases in the big shorts EU portfolio of Gladstone Capital. We rarely observe such rather synchronous activities across a short portolfio of a single hedge fund.

For example, short position in UK's online fashion retailer, ASOS has been cut four times starting on 2019-09-11 and short position went from 1.41% to 1.07%. 

Ten of eleven Gladstone Capital's short positions, in our EU records, have been reduced. The only exception is their 0.72% short in Österreichische Post that has not been changed since 2019-08-01. Three big shorts have been cut below disclosure threshold in September, while eight are still above it. Short portfolio remains rather balanced, both country-wise and sector-wise, with three bets against UK firms, and two each in: EU Banking and EU Machinery, Equipment & Components sector.

Notably, Gladstone Capital is still holding the biggest short in Burford Capital. Burford was in focus of two recent activist short reports by: ShadowFall in July (down about 51% vs prior to the report) and Muddy Waters in August (down about 28% vs prior to the report). Gladstone's short in Burford first appeared in June, long before activist short-sellers reports, and, according to our records, was reduced for the first time on 2019-09-16, after seven consecutive increases.

Interestingly, two well-known European hedge-funds have also been reducing many of their big EU shorts in the past weeks, but to a somewhat lesser extent than Gladstone Capital.

Recent development of Italian and UK big shorts of Gladstone Capital:

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* Note: Presented short selling data is based on European net short position data which is disclosed to the public when short positions at least equal to 0.5% of company issued share capital. „Big short“ refers to a short position above 0.5% of company issued capital. Presented data and analytics is as of available on 2019-09-20.

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