Renault CEO arrest: Short seller made $113 million bet before stock fell

AP
Images / Richard Drew

• Merian Investors placed a bet on Renault’s shares
  falling on October 30, according to regulatory
  filings. 
• Renault’s shares dropped as much as 14% Monday after
  its CEO was arrested over financial misconduct
  allegations.

London-based Merian Investors, formerly Old Mutual Global
Investors, made a sizeable bearish bet on Renault before the
stock tumbled. 

The fund placed a 0.51%
short position on the French car company’s shares on October
30. Renault’s market cap was about €22.1 billion
($25.3 billion) on that date, meaning the size of the position
was around $113 million. 

Shares of the French car maker
tanked following news that its CEO and Chairman Carlos Ghosn was
arrested after Nissan outlined his “serious acts of
misconduct.” Brazil-born Ghosn, 64, is accused of undereporting
his salary at Nissan, where he served as chairman. He also held
the chairman role at Mitsubishi as part of a strategic
partnership between it, Renault, and Nissan. 

Since October 30, makers of cars and auto parts have been the
worst performing sector in the Stoxx Europe 600 Index, down about
2.6%, according to Bloomberg data. The auto industry has dragged
on the overall index, due in part to fears surrounding global
trade amid the
US-China spat on tariffs. 

Merian declined to comment on its trading positions. 

Trade war fears have hit the automaker industry hard this year
with Renault now down 33%
for the year. The company lost $2 billion from its market cap
Monday. 

Merian also has a 1.5% short position in French auto parts maker
Valeo, according to Breakout Point data.

The chart below shows the rest of Merian’s short positions by

industry:

Merian
Investors’ short positions by sector

Breakout
Point