Hedge funds have pared bets against Glencore Plc as the Swiss mining and trading giant’s shares recover from a 70 percent rout last year and commodity prices recover.
Passport Capital, a $4.4 billion hedge fund in San Francisco, cut its short position by 11.5 million shares to 0.47 percent of stock outstanding on March 4, according to filings. Viking Global Investors, Discovery Capital Management, Key Group Holdings and Steadfast Capital Management have also reduced bets against the company since the start of February. Short interest now accounts for 6.9 percent of the company’s stock, compared with 8.5 percent on Feb. 4, according to Markit Ltd.
Glencore plummeted along with commodity prices last year amid an economic slowdown in China, the world’s biggest industrial-metals user. The stock advanced 50 percent this year, even after tumbling on Tuesday when a report showed the biggest drop in Chinese exports since 2009. A spokesman for the Swiss-based company declined to comment.
“It’s still an incredibly robust business,” said Jeremy Sussman, a New York-based analyst at Clarksons Platou Securities Inc. who rates Glencore as a buy. “When Glencore reported earnings last week they came out with very strong trading results for the second half of last year.”
Not every hedge fund is reducing short positions. London-based Lansdowne Partners, which holds the biggest bet against Glencore, increased its position by shorting a further 31.7 million shares on Feb. 4, taking it to 1.58 percent of shares outstanding.
Officials at Lansdowne, Discovery and Passport declined to comment on their holdings in Glencore. Viking, Key Group and Steadfast didn’t immediately respond to e-mailed requests for comment.
Hedge funds short shares by borrowing stock and selling it on the market with the aim of buying shares back at a lower price and pocketing the difference.
Peter Grauer, the chairman of Bloomberg LP, is a senior independent non-executive director at Glencore.