Manchester United may have got off to a solid start on the field this season, but increasing numbers of investors are taking a less positive view of the club’s performance off the field.
Almost 11pc of the shares sold in Manchester United’s controversial $2.9bn (£1.8bn) flotation last month are now in the hands of investors looking to profit from a slide in the company’s stock - so called shorting - according to Markit.
That amount has more than doubled from the days immediately after the initial public offering in New York.
News of the shorting comes as the company prepares today to report fourth quarter profits, its first set of tradng figures since the float.
The number of shares shorted will add to some fans’ concern over the flotation.
Manchester United’s Supporters Trust has criticised the IPO because not all of the $233m raised was targeted at paying down the club’s debts which stand at more than £430m.
“It’s a story that is interesting to short sellers,” said Simon Colvin, an analyst at Markit. “People have ingested the current situation of a highly leveraged sports team that is open to the whims of the football season.”
The US-based Glazer family, which used the IPO to sell about 10pc of the club they acquired for £790m in 2005, opted for a flotation just as Manchester United faces increasing competition for domestic trophies from local rival Manchester City, and for the European Cup from the likes of Barcelona and Real Madrid.
Mr Colvin said that the the volume of shares available for short-sellers to borrow has risen as investors at the IPO allocate a portion of their holdings to the lending programmes speculators can tap in to.
Companies in the S&P 500 have an average 3.4pc of their shares in the hands of short-sellers, says Markit.
Short-sellers borrow shares and then sell them in the hope the price will fall. They make money by buying back the shares at a lower price, returning the shares to the original owner and then pocketing the difference.
Shares in Manchester United stood at $12.575 in early trading in New York, some 10.2pc down on the company’s flotation price of of $14.
Manchester United declined to comment.
article source: http://www.telegraph.co.uk/finance/newsbysector/retailandconsumer/9549193/Manchester-United-faces-threat-from-speculators.html
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