Monday, 22 January 2018

Asset managers shorting their own clients

Hat-tip to the smart people in Labour's shadow DWP team who have spotted that whilst Blackrock was shorting Carillion it was also managing money for Carillion's DC scheme.

Inspired by that, I went and had a look at a few other companies on the FCA list of short positions, and what do you know.... I found four (update: five) other interesting examples. What is below is based on a) the FCA data and b) the most up too date pension docs I could find on a quick trawl. There might be more out there. Anyway... 

Blackrock Investment Management UK was shorting AA Plc as at 28th Dec 2017. Blackrock was listed as a asset manager for the AA pension scheme in its 2017 annual report.





Blackrock Investment Management UK was shorting Babcock Plc as at 16th Jan 2018. Blackrock was listed as an asset manager for the Babcock Plc pension scheme in its 2016 annual report.


Blackrock Investment Management UK was shorting Kingfisher as at 24th Nov 2017. Blackrock took over benefits transferred out of the wound up Kingfisher Retirement Trust.





Blackrock Investment Management UK was shorting Pearson Plc as at 18th Jan 2018. Blackrock was listed as an asset manager for the Pearson DC schemes in its 2017 annual report. (Full disclosure: I'm a member of a Pearson DC scheme!)




This is is just on a pretty quick skim looking only at Blackrock Investment Management UK, and only at currently disclosed positions. I'll have a look at other managers and historical data when I get a bit of time.

Needless to say, it's not illegal or anything for Blackrock to both run pension fund money for a company and short the sponsor at the same time. It's also surely the case that the decision to short is taken by a completely separate part of the business to that responsible for these schemes - there ought to be chinese walls in place.

But let's be honest, the optics aren't great are they?

Update: another one

A different bit of Blackrock, with a short position on Serco as at 5th Jan 2018. Blackrock was awarded a £1.5bn LDI mandate by Serco's trustees last July.



2 comments:

Brendan Maton said...

Tom,

You are on to something. There is an issue of transparency. Employees of AA, Pearson, Carillion et al might be inadvertently betting against their own company via their pension plan. They might want to. The issue is does BlackRock know who is ultimately benefitting from the shorting - that is a different point to the fact that separate BlackRock team/prduct might be short a stock to the team/product long the stock? Second, does that information get communicated to pension scheme members?

Brendan Maton said...
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