Housebuilding crisis: rumours hedgefund in trouble

Toscafund, one of London’s biggest hedge funds, has found itself fighting off widespread rumours that it is in trouble.

Poor performance has resulted in Tosca falling in value by more than 15% in the 12 months to the end of May - thanks to a bet that share prices of housebuilders and banks would recover. They haven’t. Well not yet.

Shares hit badly where Tosca is known or thought to have a large stake include Redrow and Taylor Wimpey.

Developments yesterday did little to help Tosca’s cause:

• Redrow shares fell by 19%
• Taylor Wimpey was equally as bad, its shares also lost 19% of their value.

The Financial Times reports that housebuilders’ share prices were savaged yesterday as confidence drained form the London Stock Market.

The FT said that fears about the economy combined with gossip that Toscafund, a leading activist investor in housebuilding, was in trouble. It was reported that the fund manager Martin Hughes dismissed the rumour, calling it “clearly totally wrong”.

Other housebuilders also took some pain:

• Bellway – down 12%
• Berkeley – down 6%
• Persimmon – down 3%