Wellm isn’t this interesting. Short-sellers smell blood in the water at WPP and have increased bets that WPP’s stock price will sink further, in the aftermath of the departure in April of longtime CEO Martin Sorrell.
WPP’s stock took a beating last year — with Sorrell at the helm — declining by nearly one-third.
The longtime company chief left in April after a widely reported company investigation into “personal misconduct” allegations. Further reports, relying on undisclosed sources, tied the misconduct probe to a prostitute and whether Sorrell inappropriately used company funds to pay for those services.
Sorrell has denied all wrongdoing and has suggested an investigation be launched as to how that information became public.
The company is currently being run by the interim team of co-COOs Mark Read, Andrew Scott and executive chairman Roberto Quarta. The firm has said the search is ongoing for a new CEO. Numerous candidates have been floated in the press, including Oath’s Tim Armstrong and Dentsu Aegis Network’s Jerry Buhlmann.
Now, according to a Financial Timesreport earlier today, hedge fund investors have made a £1 billion bet (about $1.328 billion) against WPP, meaning those funds expect further declines in the company’s stock price.
But to be fair, and as the FT article points out, these hedge fund bets have accumulated over the past year. So it’s not like they’re saying, “Sorrell is gone, the company is screwed.” The message seems to be more like, “wow, the sh*t has hit the fan at WPP over the past year and we don’t think the mess has bottomed out yet.”
I have no idea how hedge funds operate, although I’m told the successful ones do meticulous research before making such bets.
I wonder what their research tells them about the Ford review. Conventional wisdom suggests that when a big client calls a review like that, the odds aren’t in favor of the incumbent. That said, incumbents sometimes pull off a surprise victory.
And the agency business, as we all know, is cyclical. It wasn’t that long ago that WPP media agency MediaCom was in trouble, losing clients left and right. But now: Agency Network Of The Year at Cannes.
If WPP prevails in the Ford review and wins another big client or two, those hedge fund bets aren’t going to look so good.