Regal closes out Magellan short

afr.com:

Magellan Financial has one less short seller to worry about.

Phil King’s Regal has bought a sizeable stake in Magellan. Brook Mitchell

Short interest in the global equity investment manager fell to 3.4 million on August 24 from 6.6 million a day prior, coinciding with Regal snapping up Magellan co-founder Chris Mackay’s 6.6 per cent stake.

This suggests the alternatives investment manager has shifted to a net long position from a net short position, though not enough to move through the 5 per cent disclosure threshold.

The move comes after Barrenjoey’s equities desk was last week looking for buyers for some $112 million in Magellan shares being offloaded Mackay. The shares were being offered at $9.40 apiece or a slim 3.1 per cent discount to Wednesday’s close.

Street Talk first reported Phil King’s Regal Funds was the buyer. It’s not known what Regal’s intentions are with the stake – although it would be safe to say listed companies don’t buy stakes in rivals on a whim. As a Magellan long, sources said King is more likely to make his views known to the board and management around its strategic direction and mooted its acquisition plans.

Short interest in Magellan has been steadily falling since late 2022 from highs around 8 per cent of the stock.

The company’s shares rallied almost 18 per centafter its annual result last week – the most in five years – after it promised to tackle costs and declared a special dividend of 30¢ a share.

New Magellan chairman Andrew Formica said he’s prepared to look at merger and acquisition targets, both in Australia and overseas, as part of a strategy to restore the fallen asset manager’s fortunes.