Prada Short Squeeze Wipes Out $31 Million From Hedge Fund TradeBy
Betting against Prada SpA is becoming an expensive business.
Shares in the luxury retailer jumped a record 23 percent in Hong Kong on Monday after the company predicted sales will recover this year. The surge wiped out about 242 million Hong Kong dollars ($31 million) from the value of speculators’ bearish bets, according to data compiled by Bloomberg and IHS Markit Ltd. Short interest was about 6.2 percent of free float as of Thursday, the data show.
To be sure, those same traders may have well made a killing with their bearish Prada positions before this week, as the stock was down some 60 percent since a peak in 2013. Short sellers borrow shares with the aim of selling them, buying them back at a lower price, and then pocketing the difference. Click here for an overview.
Prada traded up 18 percent at 11 a.m. in Hong Kong.