Yahoo Finance Hedge fund Lansdowne Partners retreats from shortselling
One of London’s oldest hedge funds is to retreat from shortselling by shutting down its main £2.2bn fund after heavy losses.
Mayfair firm Lansdowne Partners, which was once seen as the gold standard for equity investors, has suffered years of poor returns in its Lansdowne Developed Markets Fund.
The long-short fund backs companies that its managers think will grow and bets against firms which they expect will suffer a decline in share price.
Lansdowne, which manages a reported $9.8bn (£7.8bn) of client money, is believed to have been hit by its bullish outlook on the UK and the airline sector. It once managed as much as $22bn.
The British economy has been dealt an historic blow by the Covid crisis, which caused the biggest slump in GDP in 41 years during the first quarter of the year.
Airlines have been one of the worst hit groups as travel restrictions grounded all but a few flights.
The firm, which also backed several companies invested in by discredited stockpicker Neil Woodford, told investors that it has become harder to make money by betting against companies and that it believes now is an excellent time to back listed companies.
The firm told investors: “Excessive short-termism has created valuations which are extreme.”
Some of Lansdowne's other funds will continue to bet against companies as part of their investment strategy.
Investors in the Developed Markets Fund are now being allowed to withdraw their cash or switch to one of the publicity-shy firm’s other funds, Institutional Investor reported.
The other funds being offered to clients are a developed markets long-only fund and a new fund investing in start ups.
Lansdowne Partners declined comment.
