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Hedge fund Citadel has made a bold £305 million bet against drugmaker GSK, marking the largest short position against the company in over a decade. Billionaire Ken Griffin’s hedge fund revealed its net short position on Tuesday, amounting to 0.51 per cent of the company’s stock, as per data from the Financial Conduct Authority analyzed by provider Breakout Point.
This move by Citadel comes amidst GSK’s recent surge in share price, with a notable 11% increase in the last month. The pharmaceutical giant raised its long-term sales forecast and initiated a rare £2 billion stock buyback earlier this month. GSK’s positive earnings report, driven by strong sales of HIV and cancer drugs, has contributed to the stock’s upward trajectory.
However, despite these recent developments, GSK has struggled to outperform its competitors in the pharmaceutical sector. The company faces challenges in exciting investors about its pipeline of new medicines and vaccines, crucial for replacing its HIV drugs as they approach a patent cliff in the coming years. Over the past five years, GSK shares have declined by 15%, contrasting with the 45% rise in the S&P 500 pharmaceutical index.
GSK’s CEO, Emma Walmsley, has faced scrutiny, notably from activist investor Elliott Management, questioning her leadership due to her lack of scientific background. The company also encountered pressure to explore takeover offers for its consumer health business Haleon, which was eventually spun off.
Analysts have expressed mixed views on GSK’s future prospects. While some view the fourth-quarter earnings and 2025 guidance positively, concerns linger about the company’s buyback strategy amidst the impending HIV patent cliff. GSK’s shares suffered a setback in 2022 due to Zantac lawsuits, although a settlement was reached in October last year. The company also faced setbacks with key products like cancer drug Blenrep and the Arexvy vaccine for RSV.
Citadel, known as the world’s top-performing hedge fund, manages a significant portfolio across various assets including equities. With $65 billion in investor capital, Citadel’s strategic bets have positioned it as a formidable player in the financial markets. GSK’s shares closed lower by 0.5% at 1,438p at the end of Friday trading in London.
Both Citadel and GSK have refrained from commenting on these developments, adhering to their policies of not disclosing individual positions or shareholders.
