Adding Robin van Persie to the team at Manchester United (MANU) was intended to hail a turnaround for the club’s performance. The much anticipated debut for the £22m player ended in a 1-0 loss to Everton. Van Persie is not the only big name to join the bench at Manchester United. George Soros has just purchased 3.1 million shares or 1.9% of the club (about $40m worth at Monday’s closing price). Can his presence turn the club’s financial fortunes around?
Soros is believed to be a keen investor in football clubs, but more importantly, he carries a kudos that van Persie could only dream of. The “Soros effect” is believed to have a positive effect on share prices just through Soros’s investment, attracting others who want to benefit from his reputation as a highly skilled investor. Should the short sellers leave the field before they suffer a penalty? Those who have played so far are certainly ahead as the price has fallen almost 7% since the IPO.
Shares on loan for MANU have been relatively low, but the utilization figures we see suggest that the supply is fairly tight, backed up by the huge fees borrowers are willing to pay. Relatively small trade sizes always attract higher than normal fees, but at the -99% rebates seen in the data, these shares are more expensive than Facebook was immediately post-IPO. Shares on loan closed yesterday at just shy of 2m shares, but as the balances rose, the utilization fell, indicating that new supply was coming. This new supply helped borrowers re-rate their trades downward, but MANU remains a very expensive stock to borrow.
The question now is which side do you want to play on? Will you back Manchester United, or do you want to play against George Soros?