Saturday 3 December 2016

Top US hedge fund has €80m short position in Paddy Power Betfair

Published 07/02/2016 | 02:30

Millennium International Management has a short position in the new Paddy Power Betfair Photo: Simon Dawson/Bloomberg
Millennium International Management has a short position in the new Paddy Power Betfair Photo: Simon Dawson/Bloomberg

One of America's top hedge funds has a short position in the new Paddy Power Betfair with a market value of almost €80m as of Friday, according to Bloomberg data.

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It is by some distance the highest-value short position in an Irish-listed company provided in the data.

Millennium International Management, an arm of New York-based asset manager Millennium, wouldn't comment on its strategy.

As well as being a bet against a company, short positions can be designed to hedge against long positions.

Public filings show Millennium had both long and short positions in both Paddy Power and Betfair prior to the merger, though these could have been unwound immediately prior to the tie-up's finalisation at the beginning of the week.

Millennium's portfolio of investments tends to be market-neutral, meaning the value of the bets on securities appreciating in value, so-called 'longs', are equally balanced with those on them declining, known as 'shorts'.

Paddy Power Betfair also declined to comment.

Shares in the new company fell 7pc between Wednesday - a day when Millennium increased its short position by around a third - and Friday, closing at £129.20 apiece at the end of the week.

The merger has been broadly welcomed by industry analysts. Davy analysts are forecasting that the group, which they call a "global sector leader" will deliver 27pc compound annual earnings growth over the next three years.

Millennium's main fund gained 12.65pc for the year in 2015, according to performance information seen by Reuters. "Having the discipline to stay hedged," said Matt Litwin, director of research at investment adviser Greycourt & Co, "paid off in a big way." Funds who placed a broad array of bets produced some of the strongest gains, beating star managers like Bill Ackman, David Einhorn and Larry Robbins who invested more narrowly and ended 2015 with steep losses.

Millennium's tendency is to have a sea of different investments, including thousands of bets on stocks alone. The New York-based firm employs more than 1,800 people and 180 trading teams, making its staff among the largest in the world for hedge funds. Millennium's founder is Brooklyn-born Israel "Izzy" Englander, a billionaire ranked as the 11th-richest hedge fund manager in the US by Forbes Magazine in 2015. It put his net worth at $5bn as of Friday evening.

The company's chief financial officer is Kevin Byrne, a graduate of Dublin Institute of Technology who previously worked at Lehman Brothers.

Additional reporting, Reuters

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