Jean Hynes, the chief executive and managing partner of the $1.4 trillion (€1.32 trillion) US investment fund Wellington Management, likes to tell the story of how she was raised by Irish immigrant parents in Boston in the 1960s. Her father was a bricklayer and her mother was a housewife, and a career at the pinnacle of asset management didn’t seem an obvious path.
Yet thanks to a scholarship to Wellesley, the prestigious women’s university in Massachusetts, she got to study economics and became intrigued by the world of stocks and shares.
Having been hired firstly as an administrative assistant at Wellington, she began her career preparing morning briefing notes on various companies and, in her own characterisation of it, her notes were simply “better because I was more interested”.
Clearly that’s no understatement, because she was talent spotted by Ed Owens, Wellington’s then chief executive, and would soon run her own portfolios and eventually succeed him in the top job in the giant firm.
While she’s probably not directly picking stocks these days, she’ll know a solid bet when she sees one, which might be of some concern to the head honchos at Bank of Ireland seeing as Wellington has just opened up a significant short position against the bank’s shares in the last few days.
Data compiled by the Central Bank shows that Wellington has a bet against 0.49 per cent of the bank’s shares, which is worth more than €40 million based on its current share price.
A short trade sees a dealer borrow shares from a broker and sells them on the open market. The trader waits for the price to fall sufficiently so they can buy new shares, return them to the broker and pocket the difference in profit.
While it’s not always possible to see a trader’s full strategy, a short is fundamentally a bet that the target company’s shares will fall in the future.
It’s a risky bet for the trader, because if the shares rise they’ll have to make up the difference out of their own pockets when they come to return the shares to the broker.
So far, though, Wellington won’t be unduly worried. Bank of Ireland’s share price has tumbled from a recent high of around €10.70 in September. On Monday the highest they traded was around €8.80, but dropped in the following days to a low of less than €8.40. Chief executive Myles O’Grady will be hoping for a rally soon.