Some big investors are taking more than one billion euros in short positions in companies listed on the Spanish stock market. Nearly half of these investments (about 488 million euros) are held by the globe's four biggest investment funds: Amber Capital, Marshall Wace, Landsdowne Partners and Wellington Management.
Fewer and fewer companies are able to escape from the hedge funds' claws. These funds are the vehicles that, as a management strategy, take short positions in companies they expect to decline in value. This kind of short selling is when funds sell assets that have not been purchased, but have been borrowed from a third party with the intention of buying identical assets back at a later date to return to that third party. The short seller hopes to profit from a decline in the price of the assets between the sale and the repurchase, as the seller will pay less to buy the assets than it received on selling them.
