Live and let fly: Short sellers trounced as ‘James Bond effect’ sends Cineworld shares soaring

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Live and let fly: Short sellers trounced as ‘James Bond effect’ sends Cineworld shares soaring

Daniel Craig Bond

Hedge fund short sellers betting against Cineworld have seen their bearish positions tank after the global cinema chain’s share price rocketed on the back of the new James Bond movie release.

AHL Partners, Polygon Global Partners, New Holland Capital and Adelphi Capital are among the hedge funds currently holding negative wagers against the London-headquartered FTSE 250-listed firm, according to regulatory disclosures made to the Financial Conduct Authority. 

Highbridge Capital Management is also holding a 1.14 per cent net short bet, while Whitebox Advisors is positioned short by some 1.40 per cent.

Cineworld – a long-running target of hedge fund short sellers on both sides of the Atlantic – has seen its share price surge in recent days, rising 14 per cent over the past week. It continued to climb on Monday, hitting 80.35, up from 60.50 in mid-September.

The troubled movie theatre operator had been forced to shutter 767 outlets globally throughout much of the Covid-19 pandemic. In March this year the group reported an eye-watering USD3 billion pre-tax loss for 2020 which knocked the living daylights out of its share price.

Even before the pandemic the company had been among the most heavily-shorted publicly-traded UK stocks in recent years, as the spectre of online streaming and home entertainment services challenged its business model.

Earlier this year, high profile hedge funds Marshall Wace, BlackRock and Citadel Advisors also held negative wagers on the group.

The dramatic rebound has been attributed to the highly-anticipated release this week of No Time To Die, the latest instalment in the James Bond 007 franchise, which has suffered multiple delays due to coronavirus. 

“The return of Bond to the screens appears to have been the agent of change movie companies sorely needed,” Susannah Streeter, senior investment and markets analyst at Hargreaves Lansdown, said on Monday.

“Business was severely shaken during the pandemic with screens shut and blockbusters delayed and there are early indications that Bond is already helping stir up a surge in much needed bookings.”

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Hugh Leask
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Editor, Hedgeweek