Hedge funds underestimate consumer demand
RR | Miami | August 7, 2023
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RELATED SUBJECTS: Booking, Carnival, Norwegian, Royal Caribbean
Shares of Carnival, Royal Caribbean and Airbnb have soared as consumers continue to spend. The news hurts the “hedge funds”, which have lost more than 6,000 million dollars in bets against cruise companies and hotels after underestimating the demand of US consumers, reveals Expansión.
Although cruise lines Royal Caribbean and Carnival are two of the top 10 short-sellers in the S&P 500, they have dashed investor expectations by more than doubling in value so far this year.
Short selling – usually carried out by hedge funds – seeks to make money by selling borrowed shares and buying them back at a lower price when the shares fall. However, the strong rebound in cruise companies and other vacation rentals has caused them $6.4 billion of losses at market prices, according to data from S3 Partners.
Carnival, Royal Caribbean and smaller rival Norwegian account for $2.9 billion of the losses. Large short positions in Airbnb, which has appreciated 70% year-to-date, and Booking.com, which is up 44%, have also inflicted heavy losses.
Many US investors entered the year expecting an imminent recession, which encouraged them to avoid sectors exposed to a decline in consumer spending. However, economic growth has held firm in the face of rising interest rates, raising confidence in the chances of lower inflation without triggering a recession.
UK-based hedge fund Qube Research and Technologies and Tellworth Investments are among the publicly disclosed hedge funds short Carnival, according to data compiled by Breakout Point.
as revealed REPORTUR.us, the monumental work that expands terminal G for cruise ships in Miami activates various audiences that opt for the offer proposed by Carnival, Royal Caribbean, MSC Cruises, Virgin and Norwegian Cruise Line, among others. Families, couples and groups of friends prefer this offer of entertainment, luxury and comfort that openly competes with vacation hotels (Miami: cruise ships with low fares and more capacity compete with hotels).
