Hedge funds that bet against Corporate Travel Management (CTM) are beginning to realise profits from their short positions off-market, as the company’s ASX suspension approaches six months. CTM, valued at $2.35 billion, has been in a trading halt since late August due to issues with its full-year audit. Corporate Travel Management is a global travel management solutions company, offering services to businesses of all sizes. It aims to deliver cost-effective and innovative travel solutions.
While short-sellers couldn’t close their positions on the ASX, they have been able to do so off-market by repurchasing borrowed shares through private transactions or brokers. Solaris Investment Management, which held a short position in CTM due to concerns about the durability of its earnings, closed its position in December at an 80 per cent discount to the last trading price of $16.07. According to Solaris portfolio manager Damien Keune, the exit price reflected the assessment of the company’s residual value, allowing them to realise a meaningful gain.
Totus Capital also reported closing part of its short position at $4 a share, a 75 per cent discount, contributing 1.3 percentage points to its Alpha Fund’s return in January. However, other hedge funds, like GCQ Funds Management and QVG Capital, are maintaining their short positions, anticipating further price declines. GCQ is reportedly offering 1¢ a share through Morgan Stanley.
Meanwhile, long-term shareholders, including Wilson Asset Management, Forager Funds Management, and Bennelong Funds Management, have been reducing their valuations of CTM. Firetrail Investments and the Hearts & Minds Investment fund have written down their stakes to zero, reflecting the uncertainty surrounding the company’s financial situation and delayed audit. Bennelong Australian Equity Partners also slashed its valuation in December to align with peer valuations.
