Hedge fund investors have made a £1 billion bet against WPP (LON:WPP), The Times has reported. The news comes at a sensitive time for the advertising giant whose chief executive Sir Martin Sorrell left the company earlier this year following a probe into allegations of personal misconduct.
WPP’s share price has been subdued in London this morning, having given up 0.12 percent to 1,219.08p as of 09:31 BST. The stock is outperforming the broader UK market, with the benchmark FTSE 100 index currently standing 0.82 percent in the red at 7,619.58 points. The group’s shares have lost more than 26 percent of their value over the past year, as compared with about a 2.5-percent rise in the Footsie.
Hedge fund investors bet against WPP
The Times reported this morning that Financial Conduct Authority figures showed that Marshall Wace and Old Mutual Global Investors were known to be shorting WPP. The newspaper further quoted data from IHS Markit as indicating that the percentage of shares in the advertising giant on loan, a proxy for short selling, has surged over the past year from close to zero to more than six percent of its share capital. There are currently about 81 million WPP shares on loan, worth almost £1 billion based on the company’s stock price.
The news comes after it recently emerged that WPP was facing a legal challenge with a US law firm preparing a class action against the advertising giant in the wake of Sorrell’s departure.
Analysts on advertising giant
The 28 analysts offering 12-month price targets for WPP for the Financial Times have a median target of 1,387.50p on the shares, with a high estimate of 1,845.00p and a low estimate of 1,060.00p. As of June 22, the consensus forecast amongst 30 polled investment analysts covering the blue-chip group advises investors to hold their position in the company.