Per Lekander Long Carbon Credits: Sohn London Conference

We're posting up notes from the recent Sohn London investment conference.  Next up is Per Lekander of Lansdowne Partners who presented a long of Carbon Credits.


Per Lekander's Presentation at Sohn London Conference

Emissions credits were introduced by the EU in 2005. Companies with high emissions either had to cap them or buy credits. The carbon market will begin to go from over supply to under supply.

In 2019, new supply will be cut by 24%. The market will balance in two years. After that there will be a shortage of credits and prices will rocket.

The market is liquid and deep.

Carbon Credits are a highly regulated and synthetic market. Lekander noted the risk of political interference.

Be sure to check out the rest of the presentations from the Sohn London investment conference.

David Craigen Short SMC Corp: Sohn London Conference

We're posting up notes from the Sohn London conference 2017.  Next up is David Craigen of Lansdowne Partners who pitched a short of SMC Corp (TYO: 6273).


David Craigen's Sohn London Presentation

SMC is a $30bn market cap Japanese company with $5bn of sales.  It is the world’s largest pneumatic components supplier with a wide global coverage (72 subsidiaries). Craigen first looked at SMC after the Olympus accounting fraud which broke in 2011. The key takeaway from Olympus was that the fraud had been going on for 20 years before it was discovered.

There are several accounting issues at SMC:

-    Large companies around the world are usually audited by one of the big four accountancy firms. SMC has had the same auditor since the late 1980s. The auditor is small with only 16 qualified accounting staff. It does not audit any other mega-cap companies. Clients of this company have subsequently been proven to be frauds.

-    There is no global unified audit. There are 36 unconsolidated subsidiaries – far too high and unusual.

-    SMC finances itself via reverse factoring. Seventy percent of payables to suppliers are factored. Why are suppliers of SMC nervous about its ability to pay them?

-    The Chairman is 91 and has been with the company since inception.

This year there have been three allegations about SMC made by FACTA online, the Japanese publication that first broke the Olympus fraud. They have highlighted related party transactions that have been made through a US subsidiary; opaque tax reporting in SMC’s Mexican operations where a private residence was used as the tax address and the late delivery of orders in the US.

Despite this negative news flow, the sell-side and buy-side maintain a bullish stance. Seventy five percent of analysts’ rate SMC a buy whilst the top five holders’ shareholdings remain unchanged this year.

Since FACTA published its findings SMC’s share price is up 80%.

Lansdowne’s short in SMC is hedged out by 3 long positions in VAT 33%, a Swiss company specialising in semiconductors; Airtac, a Taiwan company which is a pneumatic components pure play; CKD 33%, a Japanese competitor, No.2 to SMC.

Revenue growth for the long basket is much higher (x3) than SMC’s. The long basket is also trading at a substantially lower valuation.

Something is not right with SMC’s margins. SMC does not sell the highest value-added products in the industry yet it’s margins are among the highest. This calls into doubt its reported earnings.


Be sure to check out the rest of the presentations from Sohn London 2017.

Sir Paul Ruddock Sohn London Conference Talk on Philanthropy

We're posting up notes from the Sohn London conference 2017.  Next up is Sir Paul Ruddock of Lansdowne Partners who gave a talk on philanthropy.


Sir Paul Ruddock's Sohn London Presentation

Sir Paul spoke about his journey in philanthropy. Those who have been successful in life have an obligation to give back. As Winston Churchill said, “You make a living from what you get, you make a life from what you give.” There are 4 key elements to philanthropy:

-    giving money
-    raising money
-    giving your time
-    using your skills

He wants his philanthropy to be a game changer. You need to research what you are going to do as thoroughly as you would an investment idea. His focus has been on education and the arts.

-    Engage the organisation to find out what they need not what you think they need.
-    Encourage the organisation to match your funding. This increases their engagement and commitment to the project.
-    Measuring philanthropic impact is not easy. Often there are no financial outcomes, but you can quantify some things. Success is often about raising aspirations and opportunities, including inspiring others to give.


Be sure to check out the rest of the presentations from Sohn London 2017.

Stuart Roden's Presentation at London Value Investor Conference

We're posting up notes from the 2017 London Value Investor Conference.  Next up is Stuart Roden of Lansdowne Partners.


Stuart Roden's Presentation at London Value Investor Conference

Stuart Roden and Peter Davis managed Lansdowne’s flagship long/ short equity fund, The Developed Markets Strategy, until the end of 2014. Since then he has taken on the role of Chairman.

He does not regard himself as a value investor or a growth investor - he is eclectic.  He likes to focus on situations that involve change typically at an industry level rather than a company level.

Investment managers need to have an appetite for risk and be able to cope with loss. Most of Lansdowne’s employees have First Class degrees but he said that sometimes very academic people particularly from a science and maths background cannot deal with uncertainty.  It’s partly due to not being used to things ‘not working out’ but also because they may not have experienced enough set-backs in life. “The stock market can make a fool of you for quite a long time.” Fund managers need common sense as well as brains and managers need to understand that they may be wrong. You can’t control events and things are going to happen that you are not ready for – you will be shocked at times.  If you can’t deal with that level of uncertainty it can make you emotionally unstable.

At Lansdowne, they encourage their portfolio managers to get four things right. Firstly, you need a creative idea. Secondly, strong analysis. Thirdly, risk management and correlation control to make sure that you are not missing a risk that runs throughout the portfolio. Fourthly, monitoring. He likes Barton Biggs’s advice on portfolio management: ask yourself is this the portfolio you would build today? His role was often to be ‘questioner in chief’. He watched out for thesis creep. Do the reasons why you wanted to buy a stock in the first place still hold true? Do you need to change your view? If you can’t change your view you won’t make it as a fund manager.

He values imagination pointing out that they made a very successful investment in Amazon by thinking creatively about the way Amazon would look in 3-5 years. This was not a momentum trade but instead required long-term thinking. They were only able to make the investment because they did not hold a static view of Amazon’s valuation.

If you can find two people who complement each other partnerships work very well in investment management. He said three people was too many. He was very lucky to have worked with his partner, Peter Davis. There was something about their partnership that worked, they were very different people, their emotions were different, Davis was optimistic whereas he was looking over his shoulder the whole time to see what might go wrong – a combination of confidence and humility. There was also an age gap that avoided them becoming competitive. Good partnerships require respect and mutual admiration.

Given the state of the markets, if he was opening a fund today it would be a long/ short fund and not a long-only fund. In the past 16 years when a lot of Lansdowne’s shorts have been in indices rather than single stocks the markets have tended to go up. Today all their shorts are in single names. Shorts are easy to find because there are so many businesses being hurt by disruption. When he first started he was often confident that they could hold equity investments for at least 5 years but today he feels that has shrunk to 3 years. There is so much uncertainty – not just in interest rates and valuations.


Be sure to check out the rest of the presentations from the London Value Investor Conference.

Lansdowne Starts Tower Resources Position

Paul Ruddock's hedge fund firm Lansdowne Partners has disclosed a new position in London listed Tower Resources (LON: TRP).  According to a disclosure made on August 2nd, Lansdowne hold the equivalent of 10.56% of Tower Resources voting rights.  We say ‘equivalent’ because the position is held completely via Contracts for Difference (CFDs) and these derivatives don’t actually confer the right to vote. 

It is uncharacteristic for Lansdowne to hold a large percentage of a company’s stock via CFDs.  They surely have a reason for doing so, but it is difficult to know why they have chosen this route in this particular case. 

Per Google finance – “Tower Resources Plc is an independent oil and gas exploration company. The   Company has targeted exploration licenses, focused on Africa. The Company holds a 30% working   interest in a license which consists of three blocks offshore Namibia through its operating subsidiary,   Neptune Petroleum (Namibia) Ltd., and a 50% interest in three contiguous licenses, onshore and   offshore, in the Sahawari Democratic Republic through its subsidiary Comet Petroleum Ltd. The  Company's primary focus is its 30% working interest in the 0010 License offshore Namibia. “

Lansdowne Partners Disclose Stake in Ocado Group: A Hedge To Their Sector Short?

Lansdowne Partners has disclosed a new long position in online grocery retailer, Ocado Group  (LON: OCDO).  Due to trading on November 11th, Lansdowne now hold the equivalent of 5.72% of  Ocado's voting rights.  

Lansdowne appear to be going against the crowd with this particular wager. The disclosed short interest in Ocado is high at -  17.29% of the company's float, including some managers with big reputations like Blue Ridge Capital and Kynikos Associates.  Here's a breakdown:

Short Positions in Ocado 

Ardevora Asset Management LLP  -0.33% of shares
BlackRock Investment Management (UK) Limited -2.52%
Blue Ridge Capital L.L.C -2.41%
Dalton Strategic Partnership LLP -1.34%
Ennismore Fund Management Limited -0.99%
GMT Capital Corp -2.52%
Kynikos Associates LP -4.35%
Newedge UK Financial Ltd -0.16%
Newedge UK Financial Ltd on behalf of Newedge Group -0.56%
Oxford Asset Management -0.55%
Parvus Asset Management (UK) LLP -0.89%
S.A.C. Capital Advisors, L.P - -0.67%

Total disclosed shorts  -17.29%

While upon cursory glance this appears to be a contrary bet by Lansdowne, examining their own book reveals that this could merely be a hedge to their other shorts in the sector.

Lansdowne has disclosed short positions in Tesco -0.62% and WM Morrison Supermarkets -2.51%.  The value of these short positions, though, is far higher than the Ocado long. Overall, it seems that  Lansdowne is bearish on the food retail sector.

For more hedge fund activity in the UK and other EU countries check out our new series of posts on short positions.

Per Google Finance - "Ocado Group plc is a United Kingdom-based holding company. The Company  is an online grocery retailer. The principal activity of the Company, along with its subsidiaries, is  retailing and distribution of grocery and consumer goods within the United Kingdom. The Company  owns Ocado Holdings Limited, which holds the entire interest in Ocado Limited. The principal  activity of Ocado Limited includes retailing and distribution of grocery and consumer goods. On  February 9, 2010, the Company acquired Ocado Limited. The Company's wholly owned subsidiaries  include Ocado Holdings Limited, which is an holding company; Ocado Limited, which is engaged  in retail and distribution; Ocado Information Technology Limited, which is engaged in intellectual  property, and Ocado Cell in Atlas Insurance PCC Limited, which is an insurance company. Ocado  Holdings Limited is a 100%-owned subsidiary of Ocado Group plc."

Hedge Fund Short Positions in the UK: Lone Pine, Greenlight, Kynikos & More

New EU rules that came into force at the beginning of November on short selling are leading to wider disclosure of shorts positions.  For example, the UK's Financial Services Authority (FSA) have implemented the EU's Short Selling Regulation and are now publishing a list of short positions on a daily basis.

New UK Short Selling Disclosure Rules

Before the implementation of the new Regulation funds and individuals only had to disclose short positions in UK financial companies and companies involved in a rights issues.  Now short positions have to be declared across all sectors.

The new rules require that where a fund's net short position reaches 0.2% of the issued share capital of a company they need to privately notify the FSA. Notification is also required again at each 0.1% increment after that. This is in relation to both increases and decreases of the position.   The obligation to privately report positions also extends to net short positions in sovereign debt and positions in uncovered sovereign credit default swaps (CDS).

ESMA has published a list of the different thresholds for each Member State in these instruments.   Public disclosure is required for net short positions of shares that reach 0.5% of the issued share capital of the company concerned and each 0.1% increment above that.  Additionally disclosure is required publically when the position subsequently falls below 0.5%.


Hedge Fund Short Positions in the UK Revealed

Today's list of short positions published by the FSA is provided below.  All of the following positions are disclosed as of November 1st, 2012 and represent the percentage of the company's shares the hedge fund is short:

Lone Pine Capital: Short -1.05% Home Retail Group

Greenlight Capital: Short -4.43% Daily Mail and General Trust

Kynikos Associates: Short -2.52% ASOS, -0.61% African Minerals

Maverick Capital: Short - 1.26% ITV plc, -4.45% Home Retail Group

Pennant Capital: Short -0.98% William Hill plc

Lansdowne Partners: Short -3.42% Weir Group, -3.27% APR Energy, -0.62% Tesco, -1.81% British Sky Broadcasting Group, -1.87% Petrofac, -2.28% Aggreko, -2.51% WM Morrison Supermarkets, -2.59% Provident Financial, -2.73% WH Smith, -1.09% Ophir Energy, -1.33% Tullow Oil, -1.71% Man Group, -0.85% Prudential plc,

Och-Ziff Management: Short -0.92% Lancashire Holdings, -1.20% International Consolidated Airlines Group, -0.82% Glencore International,

Elliott Management: Short -2.65% Stagecoach Grou, -1.65% First Grou, -0.71% Glencore International,-0.59% Reed Elsevier,

SAC Global Investors: Short -1.11% Electrocomponents

SAC Capital Advisors: Short -0.74% Ocado Group

Odey Asset Management: Short -1.43% Lonmin, -1.44% Dignity, -1.77% APR Energy, -0.84% Capital Shopping Centres Group, -0.59% Serco Group

Joho Capital: Short -4.03% CSR

Luxor Capital: Short -1.82% Blinkx, -1.32% WH Smith,

D.E. Shaw: Short -0.52% TUI Travel, -0.64% WPP

Marble Arch: Short -2.05% Dixons Retail, -1.79% Home Retail Group

Axial Capital: Short -0.55% TUI Travel


For all our other coverage of hedge fund short positions, click here.


This initial slew of disclosures is a bit overwhelming, but we'll continue to monitor the filings and post about notable changes and new short positions taken by prominent hedge funds on an individual basis.

You can track all other hedge fund activity in UK markets from what we've posted in the past via that link.

Hedge Fund Lansdowne Partners Increase Prudential Plc Short

Paul Ruddock and Steven Heinz's UK-based equity long/short hedge fund Lansdowne Partners has increased its short position in London listed financial services group Prudential plc (LON: PRU).

According to a filing made on October 6th, Lansdowne now hold a short position equivalent to -1.6% of Prudential's outstanding shares. The hedge fund has actually held a short in this company since 2009. In February 2009, their short represented -0.45% of outstanding shares and that position was gradually increased throughout 2010 and 2011 (now at its highest point).

Prudential Plc is Lansdowne Partners only disclosed short position in a UK listed financial company at the moment. As we have reported previously, during 2010 and 2011 Lansdowne reduced their shorts in Old Mutual (LON: OML), Legal and General (LON: LGEN) and Aviva (LON: AV.) to below the regulatory threshold of -0.25%.

In our September hedge fund performance numbers post, we highlighted that Lansdowne's $8 billion UK equity fund was -1.59% in September and -15.16% for the year at the end of September.

In other UK hedge fund activity, we also just detailed how hedge fund manager Odey added to their RSM Tenon Group Position. You can also read Odey's market outlook as well.

Per Goodle Finance - "Prudential plc (Prudential) is an international financial services group, with operations in Asia, the United States and the United Kingdom. Prudential is structured around four business units: Prudential Corporation Asia, Jackson National Life Insurance Company (Jackson), Prudential UK insurance operations and M&G. Prudential Corporation Asia's core business is life insurance, health and protection, either attached to a life policy or on a standalone basis, and mutual funds. It also provides selected personal lines property and casualty insurance, group insurance, institutional fund management and consumer finance (Vietnam only). In the fund management business Prudential holds a 49% stake in a joint venture with ICICI, in the People’s Republic of China, it had a 49 % stake in a joint venture with CITIC and in Hong Kong it has a 36% equity stake in a joint venture with Bank of China International."

Lansdowne Partners Buy Mwana Africa (LON:MWA)

UK hedge fund Lansdowne Partners have purchased 11.51% of Mwana Africa's (LON: MWA) outstanding shares. At first glance, it appears as though Lansdowne bought the majority of this stake via the recent placement. This position was revealed by UK regulatory filing.

This company mines various metals, including gold. Equity stakes in gold miners seems to be a popular investment amongst hedge fund managers as we just detailed Baupost Group's miner stake this morning.

In other activity from Lansdowne, we previously detailed the increase in their Gartmore stake. Paul Ruddock and Stephen Heinz head Lansdowne, one of the largest hedge funds in the world.

Per Google Finance - "Mwana Africa PLC (Mwana Africa) is engaged in the exploration, development and production of nickel, gold, copper and diamonds. It has four segments: gold, nickel, diamond and exploration. Mwana Africa has interests in gold, nickel and other base metals, and diamonds in Zimbabwe, the Democratic Republic of Congo and South Africa. Bindura Nickel Corporation (BNC), Zimbabwe, is situated near the town of Bindura, 90 kilometers northeast of Harare."

Lansdowne Partners Increase Gartmore Stake

Paul Ruddock and Stephen Heinz's hedge fund Lansdowne Partners recently filed a disclosure in UK markets regarding portfolio activity. Due to trading on February 1st, Lansdowne now hold 10.05% of Gartmore's (LON: GRT) voting rights or equivalents via a combination of shares and contract for difference (CFDs ~ we've penned a primer on CFDs here).

Back in November 2010, we highlighted that the hedge fund had built up a 6% holding just days after one of Gartmore's star fund managers, Roger Guy, had resigned. Lansdowne has added to their position in sizable fashion in recent months. For other activity from this prominent hedge fund, we posted about how Lansdowne reduced a short position.

Per Google finance "Gartmore Group Limited is a United Kingdom-based company engaged in the provision of fund management services. The Company is a traditional equity and alternative asset management firm, whose mutual funds, alternative funds and segregated mandates are distributed to clients in the United Kingdom, Continental Europe, North America, Japan and South America."

Stay tuned as we'll be posting up the latest letter from Lansdowne later this week on MarketFolly.com.

Lansdowne Partners Reduce Short in Legal and General (LON: LGEN)

UK hedge fund Lansdowne Partners recently disclosed activity on the London Stock Exchange. Paul Ruddock and Stephen Heinz's firm have reduced their short position in Legal and General (LON:LGEN). They have gone below the -0.25% threshold required to report a short position in the UK.

As such, it's difficult to say if they've covered their position entirely, or if they still maintain a smaller sized short position. Due to the reporting thresholds in place in the UK, we won't know unless they cross that line again.

Lansdowne held their short position in L&G for over two years as shares traded for less than 25p in January 2009 and today trade around 116p. We originally detailed this stake in our post on Lansdowne's short positions.  For other issues, there's LegalZoom.

Per Google Finance - "Legal & General Group Plc is a provider of risk, savings and investment management products in the United Kingdom. It operates in four segments: Risk, Savings, Investment management and International. The Risk segment includes individual and group protection, individual and bulk purchase annuities, general insurance and the housing network. The Savings segment includes unite trusts, individual savings accounts, investment bonds, non profit, pensions, structured products and with-profits products. The Investment management segment includes index funds, fixed income, risk management solutions, property and private equity. The International segment includes term insurance, group protection, wealth management and unit-linked savings."

Check out more hedge fund activity in the UK here.

Hedge Fund Lansdowne Reduces Short Position in Aviva

UK based hedge fund Lansdowne Partners has reduced their short position in Aviva (LON: AV). Paul Ruddock and Stephen Heinz's hedge fund have gone below the -0.25% shares outstanding threshold, meaning that they no longer have to disclose the position to UK regulators.

Just because they've reduced the short position does not mean they've covered entirely. In fact, they've gone below this threshold once before already this year. Here is a timeline of Lansdowne's short in Aviva (AV):

February 2009: Short -0.34% of shares outstanding
March 2010: Short reduced below the -0.25% reporting threshold
June 1th, 2010: Increased short position to -0.49% of shares outstanding
November 2010: Reduced below the threshold again

So, it's anyone's guess as to whether they've just reduced position size or covered completely here, we won't know unless Lansdowne comments on the position or adjusts their size again. In the past, we've taken a look at Lansdowne's other short positions as well.

As noted in our latest hedge fund performance update, Lansdowne was -3.87% for the year at the end of September. In terms of other portfolio activity from the hedge fund, we saw them acquire a position in Central Asia Metals (LON: CAML).

Taken from Google Finance, Aviva is "engaged in the provision of financial products and services, focused on long-term insurance and savings business, fund management and general insurance and health."

To see what else this hedge fund has been up to, check out all our posts on Lansdowne Partners here.

Lansdowne Partners Acquires Central Asia Metals (LON: CAML) Position

Steven Heinz and Paul Ruddock's hedge fund Lansdowne Partners have recently taken a 17.94% stake in Central Asia Metals (LON: CAML). Due to a regulatory filing in the UK, it shows that Lansdowne bought their shares on the 29th of September when Central Asia Metals listed in London and placed £38.1m shares. The company plans to use the money raised to build a SX-EW plant at Kounrad that will have the capability to produce 10,000 tonnes of copper cathode a year.

It's unclear as to whether the hedge fund acquired these shares in the IPO or on the open market, but given Lansdowne's prominence, we'd guess the former. For more coverage of this UK hedge fund, we recently detailed a portfolio update on Lansdowne.

According to Reuters, the "newly listed company is looking to sign the deals for when it ramps up copper production from its 60-percent owned Kounrad project in Kazakhstan at the end of next year, but is wary of setting prices too early."

Central Asia Metals plc is an AIM-listed UK incorporated company based in London. Its main countries of operation are Kazakhstan and Mongolia. CAML is a precious and base metals mining, exploration and development company with majority stakes in copper, gold and molybdenum projects throughout Central Asia.

In terms of other recent hedge fund activity in UK markets, we detailed that Harbinger Capital sold some of Inmarsat.

Hedge Fund UK Positions Update: Eton Park, Lansdowne, & Odey

While Market Folly typically focuses on that of equities traded on US exchanges, we also like to track the UK holdings of the top hedge funds. Today we'll summarize the latest moves in the UK from some of the biggest managers due to regulatory filings.

First, Crispin Odey's hedge fund firm Odey Asset Management has increased their position in Pendragon (LON: PDG) two times in recent months. Due to portfolio activity on August 8th, Odey boosted their stake from a 14.56% stake to 16.35%. Then, on the 9th of September, Odey again raised their stake, this time to the current 17.79% ownership level. Pendragon is a UK car dealer and Odey has actually been involved in this sector/industry for much of the year.

Back in February, we posted up an investor letter from their flagship Odey European fund in which Odey disclosed a position in another UK car dealer, Lookers (LON: LOOK). We can't confirm whether or not Odey still have the Lookers stake as they've not crossed above the UK"s mandated 3% disclosure threshold. However, Odey has revealed their thesis behind the car dealer play writing,

"I have bought well managed businesses, where management have taken the necessary action to live in a world in which demand remains excessively weak. Where management have demonstrated the ability to take advantage of further dislocation - for instance if interest rates were to rise, they would be able to exploit this as an opportunity to buy their rivals. In the UK this has put me into the likes of Lookers and Pendragon, both car dealers. Current new car sales are running 1.8 million cars a year, some thirty per cent below the replacement rate of 2.8 million cars. Money is being made in used car sales and servicing, both of which are benefitting from the ageing of the fleet. On a P/E for this year of 5x, I find shares that are on discount to a level of profitability which already discounts the worst. That double discount gives me a great deal of comfort."

For more thoughts from this hedge fund, head to Crispin Odey's recent market outlook.

Second, we see that Eric Mindich's Eton Park Capital has disclosed a brand new position in Goldenport Holdings (LON: GPRT). They own 5.57% of the shares outstanding and this was due to portfolio activity on September 8th, 2010. Taken from Google Finance, Goldenport Holdings is "an international shipping company that owns and operates a fleet of container and dry bulk vessels that transport cargo worldwide." In terms of other activity from Eric Mindich's hedge fund, we revealed their new stake in Doral Financial (DRL) in August and also detailed some of Eton Park's portfolio as well.

Third, we'll turn to portfolio activity from Steven Heinz and Paul Ruddock's Lansdowne Partners. The major UK hedge fund reduced their position in Petropavlovsk (LON: POG) below the regulatory threshold of 5% ownership in a company. Petropavlovsk is involved in the development and mining of gold. Previously, the hedge fund owned greater than a 5% stake but now we no longer can view their stake due to portfolio activity on August 5th. Conversely, Lansdowne increased their position in RGI International (LON: RGI) to a 4.76% ownership stake due to portfolio activity on August 20th. RGI is involved in property development in Russia. Other past portfolio activity from Lansdowne includes covering their Old Mutual short position.

Last, we wanted to touch on a few merger arbitrage related plays. Eric Mindich's Eton Park has been in Dana Petroleum (LON: DNX), a company in takeover talks with a Korean company. Also, John Paulson's hedge fund Paulson & Co has been in SSL which is in takeover talks with Reckitt Benckiser.

For all our other coverage of stocks in this market, head to our posts on UK positions taken by hedge funds.

Hedge Fund Lansdowne Partners Covers Old Mutual Short Position

In the past, we've highlighted hedge fund Lansdowne Partners' short positions. This time around, we get word that they've actually covered one of these stakes. Due to trading activity on the 5th of July, 2010, Lansdowne has reduced their short in Old Mutual plc (LON: OML, pink sheets: ODMTY) to below the regulatory disclosure threshold of -0.25% of shares. Back in November 2009, Lansdowne's short in OML accounted for -0.49% of shares. Then, on July 1st, 2010 Lansdowne reduced it to -0.31% and now it has crossed below the -0.25% threshold.

It is entirely possible that Steven Heinz and Paul Ruddock's hedge fund still maintain a short position. The problem is, we won't know now as it's fallen below disclosure levels. Based on the pattern of their reduction though, it seems clear that they've been aggressive in ratcheting down this stake.

While hedge fund Lansdowne have covered the vast majority (if not all) of this short, they are still short the following companies according to the latest UK disclosures: Legal and General, Prudential plc, and Aviva. You can read up more on Lansdowne's short positions in our recent post.

Taken from Google Finance, Old Mutual plc "operates a financial services business and is engaged in the provision of long-term savings solutions, asset management, short-term insurance and banking solutions to customers worldwide. It also offers financial services in Africa through operations in Namibia, Zimbabwe, Malawi, Kenya and Swaziland. Its banking business in Africa is conducted by Nedbank Group, in which it has a 59 % controlling interest. The Company operates thorough a number of subsidiaries, including wholly owned Mutual & Federal Insurance Company Limited, the South African general insurance company, Skandia Life Assurance Company Ltd, which offers life assurance solutions, Skandiabanken AB, engaged in the banking sector, as well as Barrow, Hanley, Mewhinney & Strauss, Inc, an asset management company. Old Mutual plc operates in 34 countries worldwide. "

You can view our coverage of Lansdowne's new longs here as well as our posts on other hedge fund UK positions.

Hedge Fund Lansdowne Partners' Short Positions

Today we're examining short positions in UK financial companies taken by Steven Heinz and Paul Ruddock's hedge fund Lansdowne Partners. Currently, they have four shorts in Old Mutual (OML), Legal & General (LGEN), Prudential Plc (PRU), and Aviva (AV). Kindly note that Prudential is a company based in the UK, not to be confused with the US company of the same name.

Over the last few months, we've highlighted Lansdowne's short position in Prudential several times during the period where Prudential attempted to buy AIG's Asian business arm, AIA. This position has received a lot of attention from the financial media as many argued Prudential was overpaying for AIA. Lansdowne's short thesis seems to extend beyond the AIA bid though, because they held the position many months before the bid was even made and they have not completely covered their short even after Prudential's bid failed.

Currently, Lansdowne's short of Prudential Plc stands at -1.18% of shares outstanding. They previously were short to the tune of -1.46% of shares back on May 5th, 2010 so they have covered a partial position but still maintain quite a hefty bet. As you'll see from our examination of Heinz and Ruddock's other shorts, Lansdowne tend to hold their shorts for longer periods of time.

All of the short positions listed below are currently still open. Disclosure rules on short positions in UK financial companies state that fund managers who are net short a UK financial sector company are required to disclose the position if it is greater than 0.25% of the firm's issued share capital. In addition, the hedge fund must disclose each time it increases the short by 0.1% of issued share capital. Also, they must disclose when the position falls below the 0.25% threshold. For a full list of companies deemed 'financial sector companies,' head to the FSA website.

While these regulations are obviously tedious for the hedge funds themselves, it's a prime example of how UK governing bodies are increasing regulation and it's interesting to compare it to the SEC's requirements. The UK is more 'fun' for Market Folly because it reveals short positions of various hedge funds and we get to highlight these positions. In the United States, these positions are closely guarded and rarely revealed so it will be intriguing to see if the SEC steps up regulatory requirements regarding public disclosure of short positions. Over a year ago, we highlighted how rampant public disclosure of short positions could possibly be a bad idea. But at the same time, increased regulation is definitely needed so maybe a compromise would be revealing shorts to the governing bodies, but not releasing them publicly. That is an entirely separate debate that we'll save for another time.

Turning back to hedge fund Lansdowne Partners' short positions, we see that they have been short the insurance company Legal and General for well over a year. This is not the first time this company has appeared in our hedge fund portfolio tracking series either. Back in May, we saw that Ken Griffin's investment firm Citadel was short Legal and General as well. Since then though, Citadel have reduced the position under the 0.25% threshold. Below are tables breaking down Lansdowne's various short positions:

Legal & General (LGEN)
February 6th, 2009: Lansdowne was short -0.47% of shares
August 26th, 2009: They increased their short to -1.16%
November 12th, 2009: Increased to -1.76%
June 11th, 2010: Reported as -1.02%

Old Mutual (OML)
February 18th, 2009: Lansdowne was short -0.39% of shares
April 20th, 2009: -0.75%
May 7th, 2009: -0.51%
October 13th, 2009: -0.41%
November 27th, 2009: -0.49%

Prudential Plc (PRU)
May 22nd, 2009: -0.95%
December 10th, 2009: -0.79%
December 15th, 2009: -0.43%
April 26th, 2010: -0.97%
May 5th, 2010: -1.46%
May 28th, 2010: -1.18%

Aviva (AV)
February 13th, 2009: -0.34%
March 26th, 2010: fell below the 0.25% threshold
June 11th, 2010: -0.49%

So, after previously covering the majority of their short in Aviva back in March, Lansdowne has re-shorted the name. And, as you can tell from above, Lansdowne typically holds their core short positions for an extensive period of time, trading around partial positions in the mean time.

Last month, Lansdowne's UK Equity Fund was -3.98% for May but still up 0.67% for the year as detailed in our May hedge fund performance update. You can view our coverage of Lansdowne's new longs here as well as our posts on other hedge fund UK positions.

Hedge Fund Lansdowne Increase Short Position in Prudential (LON:PRU) Again

While we realize this is the third such update in a short span of time, it's rare you see public disclosures of short positions by hedge funds so we figured we'd provide as much detail as possible when we get the chance. Late last week we disclosed that UK based hedge fund Lansdowne Partners was short Prudential plc (LON:PRU - traded in London. It's not the American insurer that goes by the same ticker symbol). Then, we saw that they increased their short position from -0.32% of the company's shares to -0.42%.

We now see that Steven Heinz and Paul Ruddock's hedge fund firm have increased their short position in PRU a second time. Lansdowne Partners are now short -0.84% of the company's stock, essentially doubling their short position from the last time we detailed their position. This most recent disclosure represents their position as of April 22nd, 2010.

We've heard from contacts in the UK that shares of PRU on the London exchange are now hard to borrow with brokers wanting 3% interest if/when they locate the shares to short. So, Lansdowne have definitely created a stir here and there are obviously a few people piggybacking this trade. Keep in mind that this position is apparently a hedge to Lansdowne's long positions in UK banks. Last week we disclosed that Ruddock's hedge fund was also long Lloyds Banking Group (LON:LLOY, NYSE:LYG).

Performance wise, Lansdowne's UK Equity fund was up 8.28% through the end of March as we mentioned in our hedge fund performance numbers post from the first quarter. Additionally, in the past we've seen that their flagship fund has returned 19.37% annualized since 2001. When we took a look at Lansdowne's portfolio late last year, we also saw that they favored large cap plays in developed countries.

Hedge Fund Lansdowne Partners Increases Prudential Short Position

Steven Heinz and Paul Ruddock's prominent UK based hedge fund Lansdowne Partners have increased their short position in Prudential Plc (LON:PRU). American readers please keep in mind that this is not the Prudential that trades on the NYSE, it is a different company. Earlier this week, we initially reported that Lansdowne was short Prudential to the tune of -0.32% of Prudential's stock. Well, we just recently learned that Lansdowne has increased their short stake to -0.42% of the company's shares. On Wednesday when we disclosed that Ruddock's hedge fund was also long Lloyds Banking Group (LLOY), we learned that their short of PRU is effectively a hedge to their long positions in UK banks. So, it seems that they've boosted their hedge.

Taken from Google Finance, Prudential is "a financial services company. The Company has operations in the United States, Asia, Europe and Latin America. Through its subsidiaries, it offers products and services, including life insurance, annuities, retirement-related services, mutual funds, investment management, and real estate services."

You can view some of Lansdowne's other portfolio holdings here.

Hedge Fund Lansdowne Partners Long Lloyds Banking Group (LLOY)

According to Reuters, Steven Heinz and Paul Ruddock's hedge fund Lansdowne Partners has built up a £1.1 billion position in Lloyds Bank (LON:LLOY, NYSE:LYG). They've calculated that this represents a 2.5% ownership stake in the bank and keep in mind that the UK government owns over 40% of the company as well. There has not been a regulatory filing regarding Lansdowne's position as their stake is below the 3% threshold that requires a disclosure. What's interesting here is that yesterday we revealed Lansdowne's new short position in Prudential and this position is said to be a hedge to their long positions in UK banks.

The hedge fund firm apparently believes that Lloyds should trade at a higher book value. It appears as though Lansdowne has flipped their view on banks as they had previously been short financial firms throughout the crisis. Heinz and Ruddock's firm now joins hedge fund colleagues GLG Partners who also have a position in Lloyds after recently exiting their stake in Barclays in favor of this bank. Lansdowne's UK Equity fund was up 8.28% through the end of March as noted in our first quarter hedge fund performance numbers.

Taken from Google Finance, Lloyds Banking Group plc is "a financial services group providing a range of banking and financial services, primarily in the United Kingdom, to personal and corporate customers. The Company operates in four segments: Retail, Wholesale, Wealth and International and Insurance. Its main business activities are retail, commercial and corporate banking, general insurance, and life, pensions and investment provision."

For more on Lansdowne, you can check out their new short position here and our past look at some of their portfolio holdings.

Hedge Fund Lansdowne Partners Discloses Short Position

UK based hedge fund Lansdowne Partners has re-opened their short position in British life assurer Prudential Plc (LON:PRU). The hedge fund's bet represents -0.32% of Prudential's outstanding stock, approximately £47 million worth. This is not the first time they've been short Prudential as they previously had a larger short position in this name back in December. Prudential Plc is expected to disclose details of their $20 billion capital raise to finance a $35.5 billion acquisition of AIA, the Asian insurance division of AIG. Please keep in mind that the company referenced above (UK based Prudential) has no ownership link with Prudential of America, a company the majority of you will be familiar with that trades under the ticker PRU on the NYSE. Make sure you don't confuse them.

Lansdowne found success on the short side of their portfolio during the financial crisis as they profited off their shorts in Northern Rock and Barclays. But then again, almost all hedge funds had some sort of success with their shorts back then. For more details on on the disclosure rules for long and short holdings in UK companies see our UK primer here.

Lansdowne of course have constantly been rated as one of the top hedge funds in London and they specialize in long/short stockpicking (although they also employ other strategies as well). Their UK Equity fund was up 8.28% through the end of March as noted in our first quarter hedge fund performance numbers. Late last year we saw that their flagship fund has returned 19.37% annualized since 2001 when we took a look at Lansdowne's portfolio and saw they favored large caps in developed countries.

Taken from Google Finance, Prudential is "a financial services company. The Company has operations in the United States, Asia, Europe and Latin America. Through its subsidiaries, it offers products and services, including life insurance, annuities, retirement-related services, mutual funds, investment management, and real estate services."