Market report: Short-seller cashes in after Paysafe share dive

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Short-sellers ripped Paysafe to shreds earlier this week and today it emerged that one of the hedge funds which cashed in on the  bear raid decided to take the money and run.

Sand Grove Capital Management, a London-based fund, closed its short position on Tuesday when US firm Spotlight Research issued its lethal attack on the digital payments company.

Sand Grove’s short position in the FTSE 250 firm fell from 0.72% to zero, according to FCA disclosures. Its bet against Paysafe’s shares, which was worth £13 million until Tuesday, emerged two weeks ago.

The share plunge was triggered when Spotlight claimed Paysafe, which owns Neteller and Skrill, was facilitating illegal gambling in China and said it faced “material risks” from regulatory action.

The shares, which were 0.4p cheaper today at 330.1p, dived by more than 30% at one point.

Paysafe said that all the information was “either factually inaccurate or has been previously disclosed”.

Other hedge funds that have held their nerve while the shares recovered on Tuesday afternoon include AEK (UK), Oxford Asset Management, and Public Equity Partners.

Sand Grove declined to comment.

London shares felt the impact of the decision by America’s Federal Reserve to raise interest rates for the second time in a decade.

The move boosted the dollar which came as a blow to miners — whose commodities are priced in the US currency — and they, in turn, dragged the FTSE 100 into the red, down 7.73 points to 6941.46.

Brent crude’s fall overnight and the prospect of cheaper fuel sent British Airways owner IAG up 13.3p, or 3%, to 447.2p and cruise ship operator Carnival up 96p or 2.3% to 4141p.

Car insurer Hastings reversed 1.4p to 235.1p after yesterday’s surge on the back of the news South African investment company Rand Merchant is to take a 29.9% holding from the group of investors — which includes Goldman Sachs — that floated the company last autumn.

Today, analysts at Peel Hunt said the deal removes the overhang as the founding shareholders always planned to offload shares.

PZ Cussons was up 3.4p at 317.2p after a solid first-half trading update in the face of tough conditions. However, the company said its St Tropez fake tan brand suffered from “poor” sales in the UK over the summer.

Shell company SigmaRoc, whose shares remain suspended on AIM, confirmed its first deal — buying Channel Islands building materials firm Ronez from LafargeHolcim for £45 million, most of which will be funded by a placing.

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December 16, 2016 |
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