A hedge fund founded by billionaire American investor Ken Griffin has taken a multimillion pound short position in food delivery company Deliveroo.
Citadel Advisors opened up a bet against Deliveroo’s stock in February which has since increased in size, with around 1.4pc of the company’s shares held short.
Mr Griffin, the fund’s 54-year-old chief executive who is worth around $35bn (£28bn), founded Citadel in 1990. The investment company now has more than $60bn in assets under management.
Deliveroo’s stock reached a 12-month high this week, settling at around £1.10 after climbing 3.4pc in Friday trading.
Even as consumers have cut down on the number of takeaways they have ordered, the soaring price of food has boosted revenues at delivery companies.
Deliveroo takes a cut of the orders made through its smartphone app, which are then delivered by couriers to diners.
The food delivery company’s shares have so far defied the cost of living crisis, despite Deliveroo last week reporting a 9pc fall in takeaway order numbers in the first three months of the year.
The group reported that revenues rose 7pc up to £512m in the first quarter of 2023, however, alongside a 12pc jump in the average value of its orders as food inflation jumped.
On Thursday, Will Shu, Deliveroo’s chief executive, said the company had delivered “resilient performance, particularly in the context of inflationary pressures and the ongoing cost of living crisis”.
Analysts at Jefferies said the results were “solid when compared with expectations” and a “validation” of Deliveroo’s “strategy and execution”.
The delivery company is now worth around £1.9bn, making Citadel’s short position worth £27m.
Short sellers borrow stocks in a company and then sell them, betting that the share price will fall so they can buy them back at a profit.
Mr Griffin’s hedge fund business made $28bn in revenues in 2022, according to Reuters. An electronic trading company he owns, Citadel Securities, pulled in $7.5bn.
The only other fund to take out a significant short position in Deliveroo is Marshall Wace, according to regulatory filings.
A hedge fund owned by Crispin Odey also took out a short position against Deliveroo in 2021, shortly after it went public, although below a disclosure threshold of 0.5pc of the company’s shares.
Deliveroo’s share price plunged in the wake of its disastrous float two years ago. Its stock has rallied so far this year, however, and is up 24pc since January.
A Deliveroo spokesman declined to comment.
Source: https://finance.yahoo.com/news/wall-street-billionaire-ken-griffin-070000870.html