market folly

It looks like we might have another potential battleground stock on our hands. European hedge fund giant Odey Asset Management has disclosed a new short position in JJB Sports (LON: JJB), a sporting goods retailer. Due to portfolio activity on the 24th of December, Odey are short -0.61% of JJB's shares outstanding. Just yesterday we posted up that Odey remains optimistic on stock markets. But obviously, as a hedge fund, they will have short positions as well.

Crispin Odey's hedge fund had to declare this position under UK regulations because JJB is currently involved in a rights issue and Odey holds greater than a -0.25% short position. For more on these rules, see our primer on UK disclosures for more information. According to recent reports in the FT, JJB Sports is expected to ask investors for a further £50m cash injection, following £31.5m promised just before Christmas.

A number of activist hedge funds have taken the other side of the trade, though. Crystal Amber, managed by Richard Berstein, owns 15.4% of JJB's shares. Additionally, Bill Gates' Casecade Fund holds a 5.5% ownership stake.

Odey's short position is even more intriguing because back in the summer of 2010, a quarterly letter from Odey disclosed that their funds were long another UK sports retailer, Sports Direct (LON: SPD). Back then, they owned 0.84% of the voting rights. If that position is still open today, then Odey potentially have an interesting pair trade of long SPD, short JJB. You can scroll through our coverage of other hedge fund short positions here.

Per Google Finance, JJB Sports is "a sports retailer supplying branded sports and leisure clothing, footwear and accessories. JJB Sports is a high street sports retailer, with 250 stores in the United Kingdom and Eire. It provides a range of products covering United Kingdom sports."

For more from hedge fund Odey, be sure to see Crispin Odey's latest market commentary.