Corporate Travel, a company that provides corporate travel management services to businesses and governments, is facing an existential crisis, leading several hedge funds to capitalise on its decline through short positions. The firm has been grappling with significant issues, including overcharging the British government and the potential of delisting from the ASX. Investors are now rushing to exit their stakes as the company struggles to meet critical deadlines and address its mounting financial woes.
QVG Capital recently closed its long-running short position in Corporate Travel, buying back shares at a mere 50 cents each. This represents a staggering 97 per cent discount from its last trading price of $16.07 in August. Portfolio manager Josh Clark highlighted the company’s “incremental negative after incremental negative” updates, which justified his refusal to pay higher prices earlier. Other high-profile hedge funds have also profited, with Doug Tynan from GCQ Funds Management holding out for an even lower 1 cent per share, and Totus Capital, which banked early profits at $4, now attempting to cover the remainder of its short at $1.
The company’s troubles escalated after revealing overcharging to the British government, initially £80 million and later ballooning to £128 million. Further compounding its challenges, Corporate Travel admitted the overcharging issue had spread to Australia. Having entered safe harbour in May, the firm now risks delisting from the ASX if it fails to produce properly audited accounts by August 31. This uncertainty leaves investors with limited options for exiting, as lenders and customers appear increasingly reluctant to agree to the company’s proposed restructuring. Several long-term investors, including Lennox Capital Partners and ECP Asset Management, have already written down most, if not all, of their exposure to the embattled travel provider.
