Metlen is a large and fundamentally healthy company, on track for €1 billion in EBITDA, but it made one mistake — which, according to reports, CEO Evangelos Mytilineos himself learned about only at the last minute.
Reports by Bankingnews on October 9 and 11, which said that Marshall wanted to push Metlen’s stock from €47.50 down to €40, have proven prophetic; the correction is now underway, with the stock trading around €42.50 and the company’s market capitalization at €6 billion (€5.47 billion in sterling).
Metlen currently ranks 78th on the FTSE 100 in London, right next to Barratt in 77th place — and the recent decline in Metlen’s share price has cost it several positions in the index.
Why are Marshall and Millennium shorting Metlen?
The hedge funds Marshall and Millennium have increased their short positions — open sales — in Metlen.
Marshall holds a 0.70% short position in Metlen’s 143 million shares — about 1.001 million shares.
Millennium holds a 0.84% short position, roughly 1.23 million shares.
Reasons behind Metlen’s decline
1. Overvaluation following FTSE 100 inclusion
Metlen entered the FTSE 100 index at a high valuation and then inflated further.
Why did that happen? Likely because key shareholders wanted the stock to rank favorably in the FTSE 100, and pushed its price upward.
But there was another element: funds linked — though not legally connected — to Marshall were initially long, helping drive the stock up excessively to €57 by mid-August. Later, they gave incentive for short funds to attack.
The first reason for the fall, therefore, was the excessive valuation.
In mid-September, BN attended a meeting that included a top U.S. banking market figure who said: “They want to take Metlen’s stock down to €35.”
There are reportedly frustrations among certain FTSE 100 companies about how high Metlen ranked upon entry.
2. The €130 million one-off loss
Metlen, while strong, made a mistake: a one-time loss of €130 million, which was deferred to the next quarter to avoid market turbulence before its FTSE 100 inclusion.
Sources say CEO Evangelos Mytilineos learned of this late in the process, and the person responsible was dismissed.
For outside observers, this may appear like a cover-up, but it was not — Metlen has no hidden skeletons.
Still, responsibility falls collectively — and ultimately on the CEO.
Once the issue became known, the company realized that if it had disclosed the €130 million loss earlier, it would not have qualified for FTSE 100 inclusion.
The handling of this situation “was not ideal.”
3. Corporate governance concerns
There is an ongoing corporate governance issue, as the Chairman and CEO positions are held by the same person, Evangelos Mytilineos.
In any case, a new CEO is expected to be appointed at Metlen.
Two key questions
A) How far will Metlen’s stock fall?
B) At what level should investors buy?
Answers
No one can know for certain how far the stock will fall.
What is known is that Marshall targeted €40, and a major U.S. investment bank suggested €35 as a possible low.
However, technical support lies at €38.20; so, to answer the second question, once the stock shows a “3” in front (e.g., €39.9), it could be a buying opportunity.
Still, all this depends on whether a broader global market correction occurs.
Note
No, Metlen is not at risk of being removed from the FTSE 100, despite some rumors.
The company ranked 100th in the index has a market value of £3.6 billion, and removal is not based solely on valuation — though maintaining a solid market cap is desirable.
There are also no plans for a capital increase, Metlen doesn’t need one.
Ignore the fake news suggesting otherwise.
Serious Note
In our view, the key question here is the entry point for buying Metlen’s stock.
That’s the crucial issue — and we’re focusing on the €38.2–€39.5 range.
As Warren Buffett once said: “I never managed to buy at the lowest price.”
That means: in the €39–€40 zone, Metlen is worth buying.
Also, technically, around €42.5, the stock should show an upward reaction — so we are now in a phase of close monitoring of Metlen’s movement.
www.bankingnews.gr
Metlen currently ranks 78th on the FTSE 100 in London, right next to Barratt in 77th place — and the recent decline in Metlen’s share price has cost it several positions in the index.
Why are Marshall and Millennium shorting Metlen?
The hedge funds Marshall and Millennium have increased their short positions — open sales — in Metlen.
Marshall holds a 0.70% short position in Metlen’s 143 million shares — about 1.001 million shares.
Millennium holds a 0.84% short position, roughly 1.23 million shares.
Reasons behind Metlen’s decline
1. Overvaluation following FTSE 100 inclusion
Metlen entered the FTSE 100 index at a high valuation and then inflated further.
Why did that happen? Likely because key shareholders wanted the stock to rank favorably in the FTSE 100, and pushed its price upward.
But there was another element: funds linked — though not legally connected — to Marshall were initially long, helping drive the stock up excessively to €57 by mid-August. Later, they gave incentive for short funds to attack.
The first reason for the fall, therefore, was the excessive valuation.
In mid-September, BN attended a meeting that included a top U.S. banking market figure who said: “They want to take Metlen’s stock down to €35.”
There are reportedly frustrations among certain FTSE 100 companies about how high Metlen ranked upon entry.
2. The €130 million one-off loss
Metlen, while strong, made a mistake: a one-time loss of €130 million, which was deferred to the next quarter to avoid market turbulence before its FTSE 100 inclusion.
Sources say CEO Evangelos Mytilineos learned of this late in the process, and the person responsible was dismissed.
For outside observers, this may appear like a cover-up, but it was not — Metlen has no hidden skeletons.
Still, responsibility falls collectively — and ultimately on the CEO.
Once the issue became known, the company realized that if it had disclosed the €130 million loss earlier, it would not have qualified for FTSE 100 inclusion.
The handling of this situation “was not ideal.”
3. Corporate governance concerns
There is an ongoing corporate governance issue, as the Chairman and CEO positions are held by the same person, Evangelos Mytilineos.
In any case, a new CEO is expected to be appointed at Metlen.
Two key questions
A) How far will Metlen’s stock fall?
B) At what level should investors buy?
Answers
No one can know for certain how far the stock will fall.
What is known is that Marshall targeted €40, and a major U.S. investment bank suggested €35 as a possible low.
However, technical support lies at €38.20; so, to answer the second question, once the stock shows a “3” in front (e.g., €39.9), it could be a buying opportunity.
Still, all this depends on whether a broader global market correction occurs.
Note
No, Metlen is not at risk of being removed from the FTSE 100, despite some rumors.
The company ranked 100th in the index has a market value of £3.6 billion, and removal is not based solely on valuation — though maintaining a solid market cap is desirable.
There are also no plans for a capital increase, Metlen doesn’t need one.
Ignore the fake news suggesting otherwise.
Serious Note
In our view, the key question here is the entry point for buying Metlen’s stock.
That’s the crucial issue — and we’re focusing on the €38.2–€39.5 range.
As Warren Buffett once said: “I never managed to buy at the lowest price.”
That means: in the €39–€40 zone, Metlen is worth buying.
Also, technically, around €42.5, the stock should show an upward reaction — so we are now in a phase of close monitoring of Metlen’s movement.
www.bankingnews.gr
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