Hedge funds and other financial speculators have made tens of millions of pounds by quietly betting that Carillion would run into financial distress.
Short-sellers, who make money by gambling that a company’s share price will fall, have been targeting the company since early 2015, but the number of bets reached a peak just before a profit warning last July that signalled the scale of its problems and sent its shares tumbling.
Carillion’s popularity with short-sellers suggests hedge funds were convinced the company was in trouble long before suspicions reached politicians and the public.
According to analysis firm IHS Markit, 18 hedge funds made £80m from the initial share slump, with much more likely to have been banked since then, after further steep falls.
The biggest winner from July’s share price crash was hedge fund Marshall Wace, whose co-founder Sir Paul Marshall was a major backer of the leave campaign in the Brexit referendum.
Another institution that took out big bets on Carillion’s downfall is BlackRock, the US-based investment institution that hired former chancellor George Osborne as an adviser last year, on a £650,000 salary.
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