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 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.

Ken Griffin's Citadel Discloses Short Position in Legal & General Group

Ken Griffin's investment firm Citadel recently disclosed a new short position via regulatory filings in the UK. Per the disclosure, we see that Citadel Advisors has a short position in Legal & General Group Plc (LON: LGEN) to the tune of -0.4361% of the shares outstanding. This filing was due to activity on May 4th, 2010 and is a brand new short stake. Citadel isn't the only firm with a short position in this company either. Marshal Wace LLP also recently disclosed they are short -0.2% of LGEN shares as of the 4th of May.

Additionally, we recently saw last week that Ken Griffin's firm disclosed a 5.3% stake in Photronics (PLAB) with 2,966,579 shares. This is a massive increase in their position as they only owned a few thousand shares back on December 31st, 2009, the last time we saw a disclosure relating to this position. It's been a while since we last covered activity from Ken Griffin's firm, but last month we detailed Citadel's increased stake in Leap Wireless (LEAP) as well.

We've been detailing short disclosures from various hedge funds and prominent investors as of late and noted that Jim Rogers is short various indexes, London based Lansdowne Partners has been increasing their short in Prudential, and Whitney Tilson's T2 Partners has been short Lululemon Athletica. While short positions are typically kept closely guarded to the vest, it's a refreshing change for us to be able to present you these various disclosures.

Taken from 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."

To learn more about Ken Griffin, we recommend checking out Scott Patterson's new book The Quants as Citadel's founder is featured in it.