Hedge fund Marshall Wace takes large stake in BA owner IAG

Hedge fund Marshall Wace has taken a large stake in BA owner IAG, one of the first big investment groups to bet on a sector battered by the coronavirus pandemic. The London-based group, one of the world’s largest hedge funds with about $48b in assets, disclosed a 3% holding on Wednesday. Marshall Wace and IAG declined to comment on the trade. The bet is a sign the group believes there is value in UK stocks, said a person familiar with its thinking. Hedge funds have been looking at sectors savaged by the coronavirus pandemic such as airlines in recent months as they hunt for bargains in the wake of plunging share prices. IAG’s shares have tumbled 60% to 98p since the end of February. The company, which owns carriers including BA and Iberia, launched a discounted E2.75b rights issue last month to cope with Q2 losses. Some funds have profited from well-timed bets in the airlines and aerospace sectors. Dan Loeb’s Third Point made money from buying Boeing bonds this year. Some hedge funds also built up short positions against IAG ahead of its rights issue, according to data from IHS Markit, which are likely to have proved profitable as the shares fell. However, other funds have been burnt, creating wariness over betting on an industry that may take years to recover. Lansdowne Partners chalked up big losses in its main hedge fund this year in part due to airline bets. Said Tazi, senior portfolio manager at Syz Private Banking, said airline stocks had fallen “probably for good reasons”. He added: “Let’s remember that, even in normal times, most airlines have not performed well relative to the market. The economics of the industry are unappealing: tough competition, high capex, strong unions, and of course oil price volatility.”<br/>