Millennium Management, an American hedge fund established by tycoon investor, Israel “Izzy” Englander, has chosen to short more than €200 million in shares from two of Ireland’s prominent business entities. The Central Bank explains that Englander’s company holds a short position against approximately 1.14% of shares in Flutter, valued around €160 million based on the current share price. Alongside this, it has bet against Bank of Ireland’s 0.50% shares, estimated to be worth around €52 million presently.
It should be noted that the stock prices for both organisations have seen an upward trajectory in recent times. Currently, Flutter’s shares near €182, demonstrating growth from the previous year’s low of around €140 in November. Bank of Ireland’s shares have also increased, from a little above €9 to nearly €10.30, within the last four weeks.
One should understand a short trade as a high-stakes gamble where the investor loans shares from a dealer, subsequently selling them in the open market. The goal for the investor is to wait for a sufficient fall in price so they can acquire new shares at a lower rate, return them to the dealer, and pocket the profit difference. This strategy hinges on the belief that the shares will reduce in price at some future point, although the overall strategy may not be plainly obvious.
Given short trades’ perilous nature — potential losses could be infinite if the gamble fails — there are stricter regulatory disclosure regulations regarding trade size compared to conventional equity investments. Over the past year, Englander’s company has manifested significant short bets against various other publicly traded Irish firms, including CRH, Origin Enterprises, Smurfit Kappa and Kingspan.
Millennium Management, founded by Mr Englander and Ronald Shear in 1989, currently oversees nearly $50 billion in managed capital.