The bottom Millennium International Management has decided to reopen a short position on Grifols equivalent to 0.53% of its capital, after several days in which the value has been affected by the volatility caused by the report from the also bearish Gotham City Research.
According to the records of the National Securities Market Commission (CNMV), Millenium opened its position on Grifols on Tuesday, January 16. At the closing price of that day, the almost 2.26 million shares that make up the short position would be valued at 20.3 million euros.
This calculation, carried out by Europa Press, is theoretical since it is not possible to know the average price at which the fund has built its position. Subsequently, the possible profit of this operation will also be affected by the average purchase price of the shares (in short positions you first sell, and then buy), the possible cost of leverage and the consideration offered to the holders of whom has borrowed these shares.
Millenium has operated for much of 2023 with Grifols with short operations. Last week, Gotham, which released a report on alleged serious accounting irregularities of the Catalan multinational to reduce the weight of its debt, decided to completely liquidate its short position on Grifols, achieving a potential profit of up to 18 million euros.
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Although it is not possible to know the origin of the shares that Millenium has borrowed for this operation, last week it was known that Capital Group, Grifols’ fifth largest shareholder, had decided lend about two million shares of its participationequivalent to 0.469% of the capital.
The fund did not indicate to whom it had lent those shares or for what purpose. The operation of a bearish investor who trades shorts implies that he has to borrow shares from a third party to sell them in the markets and then buy them back and return them to their original owner. The profit is obtained when the price of a security falls. The more the value on whose fall you bet falls, the more whoever is involved in the operation wins.