Short sellers are eyeing up Hargreaves Lansdown and St James’s Place as the pair are grilled over their connections to the Woodford Equity Income fund.
The D2C retail giant and wealth manager are now among the most shorted companies in the FTSE 100, with hedge funds shorting 7.4% of SJP’s stock and 6.2% of Hargreaves’ stock, the Financial Times reported citing figures from IHS Markit.
The biggest short positions on Hargreaves belong to AQR, Lansdowne Partners and Marshall Wace, according to data from the FCA register. The trio account for 3.18% of the shorts on the D2C firm.
Blackrock, Citadel and AQR are among the hedge funds shorting SJP. AQR has the largest short position of the three at 1.4%, while Blackrock and Citadel have 0.5%.
Many of the shorts were initiated after the suspension of the Woodford Equity Income fund in June.
Since then Hargreaves’ share price has fallen 23% to £17.91 a share. SJP’s shares meanwhile are up 5% since June though its shares are trading well below their peak price of £11.43 per share in May.
Both Hargreaves and SJP have been called out for their connections to Neil Woodford with Hargreaves in particular being singled out for its continued promotion of Woodford Equity Income via its Wealth 50 best buy list despite admitting it had misgivings about the level of unquoted and hard-to-trade assets since late 2017.
In addition, SJP’s “cruise and cufflinks” aggressive sales culture has been splashed across the front pages of the national press alongside allegations of a “macho culture”, data breaches and a lack of transparency at the firm.
But so far, the flurry of bad press has failed to impact the D2C firm’s and discretionary manager’s bottom line or prompt customers to take their business elsewhere.
SJP’s total assets climbed to a record £112.8bn in Q3 despite the unwanted press attention and its annualised retention rate of client funds was 96%, broadly unchanged from a year ago.
Hargreaves also did not see a drop off in new business coming to the platform in the months following the Woodford Equity Income suspension and actually took in 31% higher flows from new business.
This is not the first time Hargreaves and SJP have been targeted by short sellers.
Hedge funds were betting on their share prices to fall this time last year after both groups revealed weaker net flows as volatility picked up in the third quarter.
