Market Report: GVC surges on main market debut but short-seller moves in

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Punters had a flutter on GVC on its main market debut, but not everyone is convinced its £1.1 billion reverse takeover of Bwin.Party will propel it to new heights.

US hedge fund Polygon Global Partners has built up a short position in the Sportingbet owner, which surged 35.3p to 502.3p as it moved up from AIM, in a wager that the group’s shares will tumble.

GVC, which beat off competition from 888 to complete a deal for the FTSE 250 firm yesterday, had managed to avoid the wrath of short-sellers which borrow shares in the hope of buying them back at a cheaper price for profit.

But last month Paris-based Syquant Capital became the first hedge fund to open a short position above 0.5%, the threshold for notifying the regulator.

Last week, Polygon was revealed as a short-seller and quickly raised its short to 1.27%, which at the current share price is worth £4 million.

Heavyweight mining and oil shares dragged the FTSE 100 back below the 6000 mark, sliding 75.19 to 5984.91, with BP the biggest laggard after its widest loss in 20 years.

Thing were not much rosier for Royal Dutch Shell, whose credit rating was cut to A+, its lowest by agency Standard and Poor’s. Even an upgrade to buy from Citi following the BG takeover failed to lift the shares, which sank 53.5p to 1446.5p.

Anglo-Aussie mining giant BHP Billiton crashed 37.5p, or 5.5%, to 640.6p after S&P cut its rating to A from A+, warning it could fall further if it does not shore up its cash position. This puts the dividend under increasing threat. 

Sports Direct was down 2.9p at 413.5p but outperformed the blue-chip index as broker Morgan Stanley upgraded the sporting goods retailer to overweight, arguing the recent sell-off is “overdone”. Analyst Anisha Singhal said: “It may have serious governance issues, but it remains a very good retailer.”

Shares in Findel, in which Sports Direct has a 17% stake, rose 6.25p to 197.75p after it sold Kitbag, which sells replica Tottenham Hotspur kit, to America’s Fanatics for £11.55 million.

The oil price retreat — Brent fell 59 cents to $33.65 a barrel — took its toll on FTSE 250 oil services groups Weir Group, down 58.5p to 809p, Rotork, 11p off at 158.5p, and IMI, 34p cheaper at 768p.

Elsewhere, former AIM darling Gulf Keystone Petroleum gushed 2.32p, or 16%, higher to 16.82p following yesterday’s promise from the Kurdistan Regional Government to pay foreign oil firms their dues this year.

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February 3, 2016 |
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