Feb 13, 2017
Top Ocado investors hold more than 100% of shares
The top 26 investors in Ocado have claims on more than 100 per cent of the online grocer's shares, an unusual situation created by its main shareholders buying borrowed stock and effectively acquiring double rights to some holdings. The large group of hedge funds shorting Ocado stock doubt whether Tim Steiner, the company's chief executive and one of three former Goldman Sachs bankers who founded it in 2000, can pull off his key growth initiative of signing up grocers outside the UK. Hedge funds commonly borrow shares to sell them "Short", in the expectation that the price will fall and they can be repurchased at a profit. The process creates two investors with rights to the same share: the buyer, and the lender who retains a right to recall borrowed shares. It is unusual for such a small group to have rights to more shares than exist - and reflects the number of Ocado shares held by the company's original backers. Investment banks have offered more than 3 per cent in annual interest to those prepared to loan shares in the delivery group, according to investors, one of whom dubbed such payments the "Ocado dividend".
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