Anglo American Under Pressure as Hedge Funds Short Commodity Producers

Oct 2 2015 | 4:57pm ET

The ongoing travails of commodity producers like Glencore have led hedge funds to look at what other companies might suffer similar share declines.

Crispen Odey’s $11.7 billion Odey Asset Management is betting heavily that shares of Anglo American PLC will also come under increased pressure. The London-based hedge fund increased its short position by 1.1 million shares in mid-September, and is now short some 10 million shares. Odey holds the largest short position in Anglo American, representing more than 0.7% of the firm’s outstanding stock, according to Bloomberg. 

Two U.S.-based hedge funds, Discovery Capital Management and Millennium Management, are also short Anglo American. Discovery, led by Rob Citrone, is short 9.7 million shares, approximately 0.7 percent of the company’s outstanding stock, while Israel Englander’s Millennium is short 7.2 million shares, or 0.5%. 

Anglo American is the world’s largest diamond and platinum producer. Its shares have dropped more than 35% since early July as concerns about a slowdown in China hit already-weak commodity producers.

However, in contrast to Glencore, Anglo American’s net debt levels as a percent of market capitalization is expected to peak this year and trend lower for the rest of the decade, suggesting the firm could be on more solid footing than its British counterpart. In the meantime, the hedge funds short Anglo American’s stock are betting it has further to drop.

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