Banks investors $15 million from Magellan’s short circuit

A Sydney investment firm has gained $15million from shorting shares in struggling fund manager Magellan, after its share price and funds under management were sent into a tailspin context of continued leadership instability.

Tribeca Investment Partners lead portfolio manager Jun Bei Liu began shorting Magellan shares, an investment tactic that takes advantage when stock values ​​drop mid-year when the listed company on the ASX was valued at around $50 per share.

Tribeca fund manager Jun Bei Liu made $15 million from shorting Magellan. Credit:Jessica Hromas

Ms Liu’s team, which holds long and short positions in Australian equities, had noticed the relative underperformance of Magellan’s flagship global equity fund and predicted it would lead to lower fees and higher outflows. , which would trigger a sell-off from investors.

Ms Liu said she had heard rumors of management instability within Magellan, but the short position was taken on the view that the value of the company’s shares was overvalued relative to its earnings.

“We felt the performance is turning, the streams aren’t that strong, it’s too expensive – any surprises will definitely be on the downside,” Ms Liu said. “Then when events have started to unfold, you really gather new evidence that the stock price will struggle.”

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Magellan’s share price fell to around $14 per share, its lowest level since late 2014, after a series of surprise announcements spooked investors and customers. “It’s quite brutal,” Ms. Liu said. “We made so much money with this short film.”

Ms Liu said it will be years before Magellan can turn the tide and predicted the stock had yet to bottom as the company failed to restore confidence.

“In fund management, it’s a matter of trust. If you don’t have that confidence, it’s very difficult to maintain the business momentum,” she said. “They’ll still have followers but a lot of them have lost faith. Even though the releases are slowing down, it’s still a lot of money coming in every week.”