Hedge fund Citadel has made a £305mn bet against drugmaker GSK, the biggest short position against the company in more than a decade.
Billionaire Ken Griffin’s hedge fund disclosed that it had entered the net short position on Tuesday, with the bet worth 0.51 per cent of the company’s stock, according to data from the Financial Conduct Authority compiled by provider Breakout Point.
The last time any firm disclosed a bet against the FTSE 100 pharmaceutical group was in 2013, according to the FCA disclosures.
GSK’s shares have risen 11 per cent in the last month, as the drugmaker raised its long-term sales forecast and embarked on a rare £2bn stock buyback earlier this month. GSK reported better than expected earnings on strong sales of HIV and cancer drugs.
But the stock has lagged rival pharmaceutical companies, as the drugmaker has failed to excite investors about its pipeline of new medicines and vaccines, which it needs to replace its HIV drugs when they face a patent cliff later in the decade. In the past five years, shares in GSK have fallen 15 per cent, compared with the S&P 500 pharmaceutical index, which rose 45 per cent.
Emma Walmsley, GSK’s chief executive, has already faced a battle against an activist investor, when hedge fund Elliott Management built a multibillion-pound stake in the company in 2021. Elliott questioned whether Walmsley was the right leader for the company, given she does not have a scientific background. It also pushed for GSK to consider takeover offers for its consumer health business Haleon, which was later spun off.
Analysts at JPMorgan said the fourth-quarter earnings and the company’s guidance for 2025 were “positive”. But they added: “We believe the market may also question the logic of a buyback three years from the start of the HIV patent cliff, with a still fairly thin late stage pipeline”. Analysts at Barclays also said that the share buyback was “unexpected”.
GSK’s shares collapsed in August 2022 when lawsuits over the heartburn drug Zantac emerged. But when GSK settled the vast majority of cases for $2.2bn in October last year, the shares did not return to their previous level.
The company has also suffered from unexpected bad news for two key products. In 2022, GSK withdrew its cancer drug Blenrep from the US market, after a trial did not meet FDA requirements for medicines that had received an accelerated approval. After further studies, the company is now expecting the drug will be reapproved by the regulator by July 2023.
Sales of Arexvy, its vaccine for the respiratory syndical virus, known as RSV, dropped in the second half of last year because a US advisory panel unexpectedly recommended limiting its use.
Citadel is the world’s top-performing hedge fund according to data from LCH Investments, an investor in hedge funds. The firm houses hundreds of trading teams who bet on a wide variety of assets including equities. Citadel manages $65bn worth of investor capital as of the start of the year, and was up 15.1 per cent in 2024.
Citadel declined to comment as the firm does not discuss its positions. GSK did not immediately respond to a request for comment.