VanEck’s long short exchange-traded fund (ETF) made a profitable move by shorting CSL one month before the company’s earnings announcement led to a significant market value drop. CSL, a blood plasma giant, saw its shares plunge 17 per cent after revealing plans to cut 3000 jobs and spin off its vaccine business. VanEck initially shorted CSL in early July and closed the position on August 20, but re-launched its short position at the end of August, capitalising on further declines. CSL is a global biotechnology company that develops and delivers innovative medicines, including those derived from human plasma. CSL’s therapies are used to treat serious and life-threatening conditions.
Cameron McCormack, senior portfolio manager at VanEck, stated that the decision to short CSL was based on a “consistent deterioration in its enterprise value relative to sales and free cash flow,” indicating concerns about the company’s ability to convert sales growth into value. The fund anticipates further downside for CSL. The timely market bet contributed to the ETF’s strong performance in the past month.
The VanEck ETF, launched in January with approximately $15 million in assets under management, delivered a 9.04 per cent return last month, surpassing the S&P/ASX 200 Index by 5.94 per cent. In addition to its successful short position in CSL, the fund benefited from long positions in Eagers Automotive, Austal, and gold miners like Evolution and Catalyst Metals. Eagers Automotive is Australia’s largest car dealership group, which has experienced a rally in its stock price due to strong demand for BYD electric vehicles.
Austal’s share price has surged nearly 300 per cent in the last 12 months, fueled by increased global defence spending. Meanwhile, Evolution and Catalyst Metals have profited from the rising gold prices, driven by geopolitical uncertainty and expectations of US Federal Reserve rate cuts. McCormack believes that gold equities remain undervalued and could further benefit if stagflation occurs in the United States.
