Lansdowne Hedge Fund Boosts Bet Against Air-Bag Maker Takata

  • Takata CEO and family-run firm own about 60% of company
  • Takata's air bags are behind biggest U.S. safety recall

Lansdowne Partners stepped up bets against Takata Corp., speculating that the share price will fall as the Japanese air-bag supplier at the center of a global safety crisis prepares to present its restructuring plan.

Lansdowne, one of Europe’s largest hedge funds, increased its short position on Takata to 2.25 percent as of Feb. 25 from 1.98 percent, according to a filing published on the Japan Exchange Group. Takata Chief Executive Officer Shigehisa Takada, grandson of the founder, and a family-run investment firm own about 60 percent of the company.

“The size of the short selling is fairly large and Lansdowne’s position shows it’s having very strong conviction that Takata will be driven into a corner,” said Mitsuo Shimizu, equity strategist at Japan Asia Securities Group. “But we should keep in mind that there may be a possibility for Takata to be rescued.”

The supplier’s shares have lost about 89 percent of their value from the high reached in 2007, and are down 30 percent this year. They fell 6.2 percent to 531 yen as of 9:08 a.m. in Tokyo trading, giving the company a market value of about 44.2 billion yen ($393 million).

Robert White, a representative for Lansdowne, which has $21 billion under management, declined to comment. Takata spokesman Hideyuki Matsumoto said the company is aware of Lansdowne and hasn’t been in contact with the hedge fund.

Takata’s air bags are at the center of a recall crisis that has seen at least 66 million of the safety devices to be replaced because they’re at risk of hurling fragments at vehicle occupants after exploding with too much force. The company could face billions of dollars in potential compensation to cover carmakers’ recall costs and has hired outside advisers to draft a restructuring plan.

Takata faces a fine of as much as $200 million over its missteps in handling the air-bag crisis. The National Highway Traffic Safety Administration found that Takata had been slow to report the defect and hid critical information from regulators and its automaker partners. The air-bag maker agreed to appoint an independent monitor to oversee its recalls and operate under the terms of a five-year consent decree.

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