Hedge fund dumps its 10% stake in Taylor Wimpey

A hedge fund that has suffered recent big losses sold its 10% stake in Taylor Wimpey yesterday.

Not surprisingly, Taylor Wimpey’s share price suffered, dropping by 3p to 18p, a drop of 15%.

Over the past 12 months, TW’s shares have fallen by 90%.

The seller was Toscafund Asset Management.

Tosca still holds a 27% stake in Redrow, another house builder.

Today’s Financial Times reports: “The fund said last week it would not be forced to sell any of its top holdings, but is dumping positions it does not regard as its best ideas.

“Taylor Wimpey is struggling to refinance its £1.7bn debt pile.

“Tosca’s holdings have been closely watched since earlier this summer when rumours of its demise – which prompted a rare public denial from Mr Hughes [the man who runs Tosca] – led to sharp falls in companies in its portfolio.”

Once rumours start that a poorly performing hedge fund is having to dump stakes, rival hedge funds go on the attack by putting their short selling teams into action, thereby helping to drive down share prices faster (and further).