HEDGE funds are queuing up to bet on a further fall in the share price of newly-floated companies like Saga and
Short sellers, who borrow shares from other investors to make gains when the price falls, currently have close to one per cent of Saga's shares on loan, according to financial information services provider Markit. Pent up demand to borrow Saga stock is also high, with about 60 per cent of stock available to borrow currently lent out to short sellers.
The over-50s insurer and holiday provider has seen shares decline from their issue price of 185p to close at 174p on Friday night, leaving about 200,000 Saga customers who bought shares in the float sitting on early losses of about six per cent.
"Saga is the best way to invest in the rapidly growing over-50s market and over time our share price will fully reflect this reality," a spokesman said.
The unit took a net short position of 0.72 per cent in Saga at the turn of the month, suggesting a bearish outlook on the group by fund managers.
Initial public offerings have come under pressure due to the poor price performance of newly-listed firms.
One of the least shorted stocks of the new floats is real estate fund
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