The Wall Street Journal reports today that a London hedge fund may have made profits of $27 million in shorting BES shares.
Tens of millions of dollars of profit may have resulted from betting on the collapse of Banco Espírito Santo as hedge funds, mysteriously ‘in the know,’ bet on its share price falling.
One of the funds, Marshall Wace, based in London, may have profited to the tune of $27 million. The value is estimated according to the last price quoted for BES shares before they were suspended at 12 cents.
On May 15, two weeks after the Troika praised the "soundness of banks" in Portugal, Marshall Wace made its first bet on the collapse of BES. In mid-June it increased its position in the bank from 0.51% to 0.85%.
TT International and Altair Investment Management may have been other winners in this high risk game, profiting by $15 million and $11 million respectively, after betting in June at a time when the collapse of BES was not envisaged.
Portugal’s market regulator, CMVM, is investigating these trades and looking at whether some investors had access to inside information about BES. The regulator will do well to look at those with information as to the real financial situation at BES, its directors.
