Hedge funds were raking it in again today, having made of millions of pounds yesterday, as shares in the heavily-shorted construction firm Carillion PLC (LON:CLLN) dropped sharply once more
After plunging 37.5% on Monday after the FTSE 250-listed firm issued a revenue warning, Carillion’s shares dropped almost another 30% today to hover around 84p a share, down 33p on the day, having lost over 70p yesterday.
READ: Carillion shares plunge as it warns on full year revenue and chief executive departs
The UK construction and support services firm warned then that its full year revenue would be lower than previously expected as it booked a £845mln provision after a deterioration of cash flows on some contracts. The company also suspended its dividend and raised its debt forecast for the year.
Carillion’s chief executive Richard Howson announced his resignation as well, with former Weir Group PLC (LON:WEIR) boss, Keith Cochrane, filling in temporarily until the group finds a permanent replacement.
Carillion has lately been one of the market’s most shorted stocks, with hedge funds betting against its fortunes.
Eighteen hedge funds shared a near-£80mln bonanza yesterday from the share price slide, according to analysts at IHS Markit, and could be racking up at least half as much again today.
READ: Carillion shares fall further as UBS reiterates 'sell' and cuts target price after bleak trading update
The biggest winner, according to disclosures from the Financial Conduct Authority, was Marshall Wace, the hedge fund of Brexit-backer Paul Marshall, which has a net short position of 3.7% of Carillion’s shares.
David Fear’s Thunderbird Partners and investment giant BlackRock also had short positions equivalent to more than 3% of Carillion's issued shares.
Other notable investment firms with short positions in Carillion included George Soros’ SFM UK Management, which could have gained around £2.5mln yesterday.
Short sellers borrow and sell shares, in a bid to make gains if the stock price falls.