Sydney-based hedge fund Sage Capital is doubling down on its short position in Commonwealth Bank (CBA), despite the lending giant’s share price continuing to climb. This move comes as the firm, led by portfolio manager Sean Fenton, faces underperformance across its strategies over the last three months. Sage Capital manages nearly $1.3 billion across its two strategies.
In a recent investor note, Sage Capital stated its view that CBA’s share price rally is unsustainable, despite the stock rising over 36 per cent in the past year. The fund’s Absolute Return Fund fell 3.8 per cent after fees, while the Equity Plus Fund dropped 2.3 per cent. According to the note, CBA’s share price multiple has rebounded beyond previous record highs, impacting the funds’ performance relative to benchmarks. Commonwealth Bank is one of Australia’s largest financial institutions, offering a range of banking and financial services to individuals and businesses. Sage Capital is an Australian hedge fund manager offering alternative investment strategies.
Despite recent losses, Sage Capital is holding firm on its trade against CBA. Fenton noted that the firm is not alone in anticipating a potential turning point for the bank’s shares. Other fund managers, including AustralianSuper, have also begun selling CBA shares. Last year, Regal Funds Management and L1 Capital also disclosed short positions in CBA. CBA’s shares have been trading around $179.59, making the short positions painful for fund managers.
Sage Capital noted that its portfolios experienced volatility due to geopolitical shocks and policy shifts. For example, its long position in miner South32 fell after aluminium tariffs were flagged. However, Insurance Australia Group and Challenger helped to hedge losses. Sage has trimmed some exposure but remains net long in Challenger, citing strong capital generation and improving regulatory settings.
