Speculation that the FSA could move to re-introduce a ban on the short-selling of UK financials (Pakistan-style) helped lift banks yesterday — albeit briefly.
Articles like this, from The Guardian, certainly (erroneously) put some pressure on short-sellers.
A hedge fund admitted yesterday it had been speculating that shares in Barclays would fall. The admission by Lansdowne Partners that it had been shorting Barclays shares on Friday – a day when the bank lost a quarter of its value – came amid concern that hedge funds could be blamed for the dramatic slide in bank shares yesterday.
Yet there were no major disclosures on Monday, other than Lansdowne’s reported position of 0.26 per cent.
And figures from Data Explorers show just a minor rise in the number of Barclays shares on loan on Friday, when the original short-selling ban was lifted, increasing from 3.14 per cent to 3.2 per cent. Utilisation (the percentage of the available supply out on loan to short investors) did increase from 17 per cent to 19.5 per cent in Friday trading (chart below) . Interestingly, Barclays also saw the volume of its shares traded at 140m, compared to last week’s average of 60m and and the six-month average of approximately 90m, according to Data Explorers.
In other words, the monsters of Mayfair were hardly jumping in to feast on Friday’s Barclays carnage.
As for other financial stocks on Friday, Data Explorers says short positions in those too, only increased marginally. HSBC went up from 1.53 per cent to 1.58 per cent, while did Lloyds TSB went from 1.19 per cent to 1.27 per cent. (For a random comparison, about 12 per cent of Tiffany stock was on loan as of Jan. 15 while JJB Sports had 10 per cent out). And as the FT notes today, there was almost no borrowing of RBS stock.
Time to revive the save our shorts campaign?
Related links:
Friday’s short interest activity on banned stocks – Data Explorers’ Short Stories