11 August 2015 – Expansión
Merlin’s share price has increased by 14% since 27 July, taking the gain in the Socimi’s share price for the year to 35%, just behind Hispania.
Merlin Properties has achieved an unprecedented milestone in its short life on the stock market. For the first time since its debut in June 2014, the largest Socimi on the stock exchange by market capitalisation has recorded ten consecutive trading sessions of share price rises. As such, the share price now sits just below its historical peak; and the naysayers who forecast that the share price was certain to fall have been forced to abruptly exit their positions.
The real estate company’s share price has soared from €9.50 to €10.81 since 27 July. This 13.8% increase first began to take root before the company closed its recent capital increase; and has only strengthened further following the completion of that operation. Merlin raised €1,033 million from its capital increase and will use the proceeds to finance part of its purchase of Testa, the real estate subsidiary of Sacyr.
Just like in the case of the recent capital increase completed by the other large Socimi in the market, Hispania, investors were eager to snap up Merlin’s new shares. Demand for the capital increase exceeded supply by 8 times and the new shares will begin trading tomorrow, Wednesday 12 August. (…).
The strong rally over the last 10 days puts an end to the “correction” that Merlin’s share price has suffered since it peaked in April at €11.22 per share. The share price subsequently fell below the €10 mark in June…in response to the company’s announcement that it had agreed to purchase Testa, in a high-flying operation that will turn Merlin into the largest real estate company in Spain, with assets of around €5,000 million.
The size of that transaction and the capital increase fired up the appetite of the most speculative hedge funds, which have spent the summer predicting that Merlin’s shares would pay the price for the size of its purchasing offensive. (…).
However, they have been caught on the back foot by the significant increases in the share price in recent trading sessions and so have had to exit their positions quickly. They have repurchased shares in the market, which sources say explain most of the sharp rises seen in recent days. The successful completion of the recent capital increase has only exacerbated that trend.
Cicogne Management, Davidson Kempner, Marshall Wave and PSquared are the hedge funds that held the largest short positions in the share, which has increased in value by 35% since the beginning of the year following yesterday’s rise. It is now very close to its main rival Hispania, in what is proving to be a very busy summer for the Socimis on the stock market.
Original story: Expansión (by Enrique Utrera)
Translation: Carmel Drake