Originally posted by ursus arctos
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The Brexit Thread
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- Jan 2012
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Originally posted by Ginger Yellow View Post
Word of warning, that article's methodology is pretty suspect. The data does not bear out the writer's thesis..
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The damage will already be done by then.
I think, overall, the right and other reactionary movements are more prone to believing and disseminating logically or factually flawed evidence that supports a dogma they already hold. But the left (or remain in this case, which is not the same thing) is definitely also susceptible to it, and to the ignoring of evidence that contradicts a cherished opinion about how the world should be rather than how it really is. See nature/nurture debates as a prime example of that.Last edited by Janik; 12-09-2019, 11:13.
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Originally posted by johnr View Postif the methodology does turn out to be suspect,
These aren’t “short positions on a no deal Brexit” or “short positions on the EU referendum result”. They’re just short positions on (the equity of) companies. All companies listed in the UK, whether they’re affected by Brexit or not. That’s what hedge funds do. They go long some things and short other things.
There’s no attempt in the analysis to see what these funds are actually shorting, whether they’d be disproportionately affected by Brexit (which would potentially indicate hypocrisy, I suppose), or whether they’re just companies that everyone knows are struggling. Do the connected funds short more or differently than the unconnected funds? The article doesn’t care. It doesn’t even tell you what proportion of the total outstanding shorts (GBP 13.4bn, using their data source) the connected funds make up, and how that compares to the connected funds’ AUM as a proportion of all funds, which is about the bare minimum analysis one would want to do for a story like this.
More fundamentally, the thesis doesn’t seem to make much sense. For there to be something nefarious here, you’d want a fact pattern something like this: funds short Brexit-exposed companies, then fund Boris’s campaign in hopes of profit as hard Brexit becomes more likely. But their own chart shows the vast majority of the shorts being put on over a month after Johnson launched his campaign, ie after you’d expect most fundraising to have happened and when it was already absolutely clear he was going to win pursuing a hard Brexit policy (and, importantly, after a whole raft of negative economic data had been published). It’s just not consistent with any logical scheme.
And looking at the actual most shorted companies and who’s shorting them, it seems pretty standard.
Odey, for instance, has big short positions in among other firms Debenhams (a deeply troubled department store which just went through a creditors voluntary arrangement and closed a bunch of stores) and Metro Bank (a so-called challenger bank which relatively recently disclosed it had messed up its capital requirement calculations and had to raise new capital), and Intu Properties, which owns a bunch of crappy shopping centres that are really struggling because of the likes of Debenhams. On the face of it, none of Odey’s biggest shorts are obvious Brexit bets.
Odey’s biggest positions (as a proportion of outstanding stock)
Debenhams 7.87 7.87
Lancashire 5.21 5.19
Metro Bank 3.10 3.27
Intu Properties 3.09 2.97
IQE 1.31 1.90
Lookers 1.32 1.32
Jupiter Fund Management 1.22 1.19
AA 0.99 0.99
Royal Mail 0.91 0.91
Ashmore Group 0.89
Indeed, the only one of the top 10 most shorted overall companies that seems to be disproportionately impacted by Brexit is Thomas Cook, a high street travel agent. But, again, that’s been in trouble for a long time and is going through a debt restructuring.
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Great to see the BBC dealing with the crisis as a state broadcaster should.
[URL]https://twitter.com/fiskjeremy/status/1171902357820661760?s=21[/URL]
[URL]https://twitter.com/ianclucas/status/1172114602718617600?s=21[/URL]
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Plaid Cymru promising a major announcement tomorrow, which suggests either a defection or an electoral pact:
https://twitter.com/Plaid_Cymru/status/1172217956316733443
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"The Speaker turns to the question of a codified constitution, saying the UK’s in a group of only three nations not to have one. He says the UK has been “travelling in the direction” of such a constitution."
Which are the other two nations?
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