Big Short hedge fund bets big on Wood Group and Amec deal
A US hedge fund is seeking to profit from the Wood Group takeover of Amec Foster Wheeler after placing a complex two-way bet on deal.
Magnetar Capital, which helped to inspire the Oscar-nominated Hollywood blockbuster The Big Short, starring Christan Bale (pictured), has bet £34.6 million on Wood Group’s shares falling and £33.3 million on Amec’s shares rising as the deal nears completion.
Such trades are known as merger arbitrage.
Firms short the suitor's stock, in this case Wood Group, while at the same time investing in the bid target to make money on the spread.
Aberdeen-based oil services firm Wood Group unveiled a £2.2 billion bid for rival Amec on March 20.
Magnetar took a short position on Wood on March 21 and has built its position over the past few weeks, according to regulatory data.
The Big Short, based on Michael Lewis’ book, looked at the collateralised debt markets in the run up to the financial crisis, a market where Magnetar played a big part.
Magnetar declined to comment.
On its website, the fund describes taking advantage of "idiosyncratic changes" to stock prices during "corporate events" like M&A.
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