Ocado Holders Click and Collect as Kroger Deal Routs Doubters

(Bloomberg) -- Rarely has one day’s trading produced such big winners and losers in a single British stock.

When Ocado Group Plc soared as much as 81 percent on Thursday, the online grocer’s biggest shareholders made windfalls worth hundreds of millions of pounds -- on paper, at least. Some short-sellers betting against the company were licking their wounds.

The surge lifted Ocado’s market value by nearly 3 billion pounds, to 6.4 billion pounds ($8.6 billion), at one point in the day -- vaulting the 18-year-old upstart past 134-year-old retail stalwart Marks & Spencer Group Plc. The move came after the U.K. company struck a deal to provide its technology to U.S. supermarket owner Kroger Co. It’s the biggest of a series of licensing agreements the company has inked over the last year after struggling for years to find any takers.

“Ocado have proved all the doubters wrong,” said Richard Bernstein, a fund manager at activist firm Crystal Amber, which holds a stake in Ocado. “Here is a British company that’s managed to do a deal with one of the most eminent global retailers.”

The surge wiped out as much as 282 million pounds ($382 million) from the paper value of speculators’ bearish bets, according to data compiled by Bloomberg and IHS Markit Ltd. Those with short positions included Marshall Wace, Kairos Investment Management and GMT Capital Corp.

Ocado has long been a target for short sellers, though have some trimmed their positions since the U.K. company clinched a technology licensing deal with French supermarket operator Casino Guichard Perrachon SA in November. Short interest was at 10 percent of shares outstanding as of Wednesday, down from a record high of 24 percent in March 2016, according to IHS Markit data.

Long-time backers of the company fared better -- in some cases, vastly so. Take Nick Roditi, whose paper profit at one point Thursday topped 350 million pounds. Roditi, a former money manager under George Soros who first invested in the U.K. online grocer in 2005, controls a 15.4 percent position through an investment vehicle.

Not far behind was Jorn Rausing, the second-largest shareholder, whose gain reached almost 250 million pounds ($337 million) at Ocado’s peak valuation. The Swedish billionaire, a beneficiary of a family trust that owns the Tetra Laval packaging company, has been a shareholder and board member since committing 15 million pounds in 2002 through his investment vehicle.

Ocado Chief Executive Officer Tim Steiner saw the value of his 1.6 percent stake swell by as much as 34 million pounds. Steiner is also a beneficiary of the Millennium Trust, which owns a separate 2.4 percent stake in Ocado, according to Bloomberg data.

The shares gave back some of their gains later in the day. But even at the 797.2 pence closing price -- up 44 percent -- those who were long on Ocado will be able to go on an almighty online shopping spree.

©2018 Bloomberg L.P.

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