Hedge funds betting against the fortunes of Ocado Group Plc got a painful surprise after the online grocery retailer said it had landed a client in France.
A 20 percent rally in the shares, the biggest in more than four years, wiped out about 55 million pounds ($73 million) from the value of the funds’ bearish bets, according to data compiled by Bloomberg and IHS Markit Ltd. Short interest was about 17 percent of shares outstanding, the data show.
To be sure, those same hedge funds may have well made a killing with their bearish Ocado trades, as the stock was down some 61 percent since a peak in 2014 amid a struggling U.K. retail market. Discovery Capital Management, GMT Capital Corp. and Marshall Wace are among hedge funds shorting Ocado, data compiled by Bloomberg show.
Short sellers borrow shares with the aim of selling them, buying them back at a lower price, and then pocketing the difference.