Two of the City’s biggest fund managers are sitting on paper profits worth millions of pounds after Talktalk shares lost nearly a tenth of their value following yesterday’s profit warning (Harry Wilson writes). Blackrock Investment Management, the world’s largest fund manager, was shorting shares equal to nearly 1.8 per cent of the struggling telecoms company’s outstanding shares, while Marshall Wace had a short position of 0.8 per cent of the stock. Both money managers were looking at sizeable profits on their positions before Talktalk’s fall yesterday but their persistence means they will probably reap bigger profits than other funds that had earlier closed their short positions. Shorting a company’s shares involves borrowing the shares from an investor that owns the stock and immediately selling. The
Blackrock Investment Management and Marshall Wace were set to benefit significantly from holding their respective 1.8% and 0.8% short positions on TalkTalk, wrote Harry Wilson in The Times. However, the two firms have since announced that they will be pulling out of the deal, which was valued at £2.3bn.