market folly

While we realize this is the third such update in a short span of time, it's rare you see public disclosures of short positions by hedge funds so we figured we'd provide as much detail as possible when we get the chance. Late last week we disclosed that UK based hedge fund Lansdowne Partners was short Prudential plc (LON:PRU - traded in London. It's not the American insurer that goes by the same ticker symbol). Then, we saw that they increased their short position from -0.32% of the company's shares to -0.42%.

We now see that Steven Heinz and Paul Ruddock's hedge fund firm have increased their short position in PRU a second time. Lansdowne Partners are now short -0.84% of the company's stock, essentially doubling their short position from the last time we detailed their position. This most recent disclosure represents their position as of April 22nd, 2010.

We've heard from contacts in the UK that shares of PRU on the London exchange are now hard to borrow with brokers wanting 3% interest if/when they locate the shares to short. So, Lansdowne have definitely created a stir here and there are obviously a few people piggybacking this trade. Keep in mind that this position is apparently a hedge to Lansdowne's long positions in UK banks. Last week we disclosed that Ruddock's hedge fund was also long Lloyds Banking Group (LON:LLOY, NYSE:LYG).

Performance wise, Lansdowne's UK Equity fund was up 8.28% through the end of March as we mentioned in our hedge fund performance numbers post from the first quarter. Additionally, in the past we've seen that their flagship fund has returned 19.37% annualized since 2001. When we took a look at Lansdowne's portfolio late last year, we also saw that they favored large cap plays in developed countries.