Multiple investors built Burberry stake

HSBC, which last month disclosed a 5.4 per cent stake in Burberry, told the British fashion company last night that the large jump in its holdings came on behalf of multiple clients rather than one investor looking to acquire a significant position.

It is not clear why it took HSBC more than three weeks to reveal the information, a move that left Burberry mystified about the identity of the shareholder. A Burberry request to HSBC, which acted as custodian for the trades, was initially refused.

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One person close to Burberry said the company was informed on Tuesday that the unusual surge in HSBC holdings was “business as usual trading” and described the nature of the investors as “institutional”.

Another person said it was “multiple” investors. Burberry and HSBC declined to comment.

The FT reported on Monday that the situation had prompted Burberry to turn to retained advisers at Robey Warshaw and Morgan Stanley to work on its defences in the event that the stake was taken on behalf of any potential bidder.

The bank disclosed that its holdings accounted for 5.4 per cent of all Burberry shares on February 11, in a filing made four days later.

Whereas UK transparency rules usually require reporting any shareholding over 3 per cent, investment managers are given partial exemption that requires them to disclose at more than 5 per cent. On March 3, HSBC said in a filing that its stake had since been reduced to below that level.

In the 15 years since Burberry became a publicly listed company, HSBC’s aggregate holding had never previously breached the 5 per cent disclosure threshold. The aggregate of its reported positions jumped to a record high of 11.8m shares this year, up from just 606,000 in the fourth quarter of 2015, according to Bloomberg data.

Shares in Burberry fell 6.2 per cent just after midday in London to £13.71. The company’s stock price is still about 15 per cent higher since the start of the year, after weathering a difficult 2015. It has faced pressures due to slowing demand in China and Hong Kong, which account for about 35 per cent of its sales.

Burberry has stepped up cost-cutting initiatives to boost performance in recent months under chief executive Christopher Bailey, who has also been the company’s creative director since 2004.

Bloomberg earlier reported on the trades.

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