The famous and infamous hedge fund, The Children's Investment Fund, has made some huge bets. The $10bn hedge fund have recently placed huge bets that Japanese shares will fall. TCI's foray into Japanese equities is not without history. Last year TCI lost a bitter fight over corporate governance at J-Power. TCI held a 9.9% stake in J-Power. TCI wanted to raise its stake from 9.9% to 20%.
This time around TCI has accumulated huge short positions in Sony, Toshiba, Sharp, Bridgestone and Mizuho. Total short position came to $1bn. The biggest position was a short on Toshiba worth $397m or some 4% of Toshiba's outstanding shares. The move has more to what meets the eye. Toshiba is one of the largest corporate shareholders of J-Power. Much of the short position was made in March. The recent rebound in the Nikkei and yen weakness would have put TCI's short positions in jeopardy. Toshiba's current price is already some32% higher than on March 10 when TCI announced its short position rose to 4%.
TCI has just exited from its 10.2% stake in Deutsche Bourse. TCI funds lost more than 40% in 2008. Looks like the "children" won't be very happy.
p/s photo: Aya Sugimoto