The hedge fund founded by the billionaire investor Ken Griffin has made a £60m bet that the share price of Ryanair will fall, the first time a short position of this size has been reported for the budget airline.
Citadel Europe took a 0.56% short position in Ryanair in early February, according to short-selling data reported to the Central Bank of Ireland.
Ryanair’s market value was €12.9bn (£11bn) at the close of trading on Wednesday, meaning Citadel’s short position was equivalent to €72.4m.
Citadel’s bet is the only short disclosed in Ryanair shares since 2012, when European regulations required all positions equivalent to 0.5% of shares to be published.
Budget carriers including Ryanair have struggled in recent months amid intense competition. In January Ryanair blamed overcapacity for pushing down fares, leading to its second profit warning in four months.
The airline has also faced recurrent disputes over the unionisation of its workforce and other staff management issues. The share price has fallen by about 30% in the last 12 months.
Griffin, who founded Citadel in 1990, is known as one of the world’s most prosperous hedge fund managers.
In January he used the vast wealth garnered from his investments – including $1.7bn in 2015 alone – to purchase the US’s most expensive home, a New York penthouse apartment reportedly worth $238m. That purchase came shortly after he bought a Georgian mansion near Buckingham Palace and a townhouse in London’s Carlton Gardens for £95m and £100m respectively.
Griffin, who is mainly based in Chicago, last month told investors in the company’s funds that volatility on the world’s stock markets would provide significant investment opportunities.
Reasons he cited for volatile share prices included global trade tensions as well as uncertainty over Brexit, according to the Financial Times. Ryanair is potentially exposed to disruption as the UK leaves the EU.
Citadel is also betting against German carrier Lufthansa, according to short-selling data provider Breakout Point. It is not the only hedge fund targeting airlines: the British hedge fund Marshall Wace has built up a short position equivalent to 2.6% of shares in Air France-KLM, the Franco-Dutch carrier.
Short sellers borrow shares from other investors and sell them on. They then pocket the difference when they buy the shares back to return them to their original owner if the price has fallen. However, they lose out if the value of the shares rises.
Citadel declined to comment. Ryanair had not responded to a request for comment at the time of publication.