Citadel Places Major Short Bet on Magnum After Demerger from Unilever

One of the worlds largest hedge funds has swiftly established a substantial short position in Magnum shares in the days following the companys demerger from Unilever the FTSE 100 consumer goods group. Miami based Citadel has disclosed a net short position valued at approximately £50 million equivalent to 0.69 percent of Magnums share capital according to filings with the Financial Conduct Authority.

Magnum whose market capitalisation stands at roughly £7.3 billion or €8.3 billion listed independently on Euronext Amsterdam this month. The short position by Citadel suggests that the hedge fund expects the share price to face downward pressure. Analysts have commented that while Magnum stock has gained ground since its debut the lack of entry into a major stock index may force some passive funds to sell their holdings which could impact the share price.

Short selling as a strategy involves borrowing shares from another investor for a fee and selling them with the expectation of repurchasing at a lower price to return them and profit from the decline. This common technique is frequently deployed for hedging broader portfolio risks or as part of arbitrage trades in companies with dual listings such as Magnum which also has a secondary listing in New York.

Citadel known for its market neutral approach that seeks returns irrespective of overall direction frequently takes numerous positions across traded securities. The firm did not comment on its position in Magnum. Citadel is recognised as an industry leader both for hedge fund performance and for market making operations through Citadel Securities. Ken Griffin the firms founder has achieved a multibillion pound fortune through the business.

Magnum now led by chief executive Peter ter Kulve is the worlds largest ice cream producer and owns the Cornetto and Carte DOr brands. The demerger formed part of Unilevers broader bid to concentrate on personal care and beauty lines. Unilever currently retains a 19.9 percent stake in Magnum which it intends to sell down over five years.

The newly independent business has also inherited a boardroom dispute originating with Ben and Jerrys activism. Recent developments saw Magnum remove Anuradha Mittal and several other directors formerly associated with Ben and Jerrys underscoring the companys commitment to a more focused direction.