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Steer shorts Standard Chartered as Buxton buys
(Update) Artemis’ Tim Steer shorted Standard Chartered before its share price plunged on Tuesday, while Schroders’ Richard Buxton bought more shares in the bank.
(Update: replaces comments made by Richard Buxton in a conference call yesterday with a phone interview this afternoon.)
Fund manager Tim Steer bet on a fall in Standard Chartered's (STAN.L) share price before the market opened on Tuesday, profiting from the subsequent sharp price drop, while Schroders’ Richard Buxton has bought more of the stock on price weakness.
Steer (pictured), manager of the Artemis UK Growth fund, said he was already shorting the bank – ie, betting that its share price would fall – before New York regulators accused Standard Chartered of around $250 billion worth of illegal dealings with Iran.
According to Stephen Yiu, assistant manager on Steer’s fund, the pair doubled their short position before the price collapsed by around 24% on Tuesday. The managers then closed out half of that position, keeping the other half due to the level of uncertainty surrounding the situation.
‘We shorted this stock a while ago, based on concern over Asia,’ said Yiu. ‘Given all the other incidents we’ve witnessed, such as JP Morgan and Barclays – you have to ask how many details do they actually know? It’s quite difficult to know, so we have only taken off half the position.’
In contrast, Richard Buxton, head of UK equities at Schroders and manager of its £2.7 billion UK Alpha Plus fund, was a buyer, snapping up more shares in Standard Chartered after the bank’s share price plummeted on Tuesday.
Buxton sold some shares in GlaxoSmithKline (GSK.L) to generate the money to take his fund's stake in Standard Chartered to over 2.8%. The bank is the only share he has held since launching his fund ten years ago.
Shares in Standard Chartered have steadily climbed higher since Tuesday's sell-off. However, at £13.64 today they remain well below their pre-crisis £16.00 price.
Buxton (pictured) told Citywire: 'There was a ludicrous over-reaction. If you read Standard Chartered’s very clear statement on Tuesday morning and if you trust the management, which I do – it’s crystal clear they say there’s $14 million of transactions where we put our hands up and said we screwed up.
'But they are not going to lose their licence. HSBC admitted they did money laundering for drug runners – there was a fine, but no loss of licence.
'It was crystal clear there were discussions with five regulators and one has broken ranks. You only need to know the politics of the situation – because it’s a bank, because it’s in the US and because there are politics involved – you can see how [people] come out with doomsday scenarios,' said Buxton.
He added: 'They will move to settle this incredibly rapidly. It’s clear other regulators are pretty hacked off with the one [Department for Financial Services] that broke rank.'
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