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Short Sellers Are Betting Against Financials

February 10, 2016 11:00 am
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According to many experts, the bear market roars on, continuing its rampage against stocks from all sectors.

With a record worst single week for the Dow already in the books for 2016 and global economies volatile, the signs sure seem to all point toward the end of the bull’s reign.

Adding to the thesis, Keefe, Bruyette & Woods, North America Equity Research has issued a note summarizing short interest so far this year.

Related Link: A New Cyclical Bear Market

‘Short Interest Surges 3.9% For Financials In Late January’

According to the research report, late January saw rises in aggregate short interest, with financial short interest rising “at a much larger magnitude.”

The data points Keefe, Bruyette & Woods emphasized include:

  • 0.4 percent increase in aggregate short interest for late January with a high at 27.1 billion shares on January 29. “Shorts increased 0.6 percent to 18.2 billion shares at NYSE and were flat with 9.0 billion shares short at Nasdaq,” the note elaborated.
  • 3.9 percent increase in financial sort interest for late January. KBW added that the final week’s jump was from 3.4 percent on January 15 to 3.9 percent on January 29.
  • 4.6 percent increase for short interest marketwide year to date.
  • 7.4 percent increase for short interest for financials year to date.
  • By January’s end, financials dropped from 16.2 percent to 15.9 percent of the market, and rose in overall shares short from January 15’s 12.0 percent to January 29’s 12.4 percent.
  • The greatest decline in aggregate short interest was attributed to property and casual insurers, while the largest increase was attributed to trust and custody banks.

The note concluded with a list of the top five financials under KBW with the largest two-week increase and decline in shorted shares (as a percentage of the float).

Top 5 Companies With Increased Shares Shorted

  • People’s United Financial, Inc. (NASDAQ: PBCT): 4.8 percent
  • Cullen/Frost Bankers, Inc. (NYSE: CFR): 3.0 percent
  • KB Home (NYSE: KBH): 2.8 percent
  • Cowen Group Inc (NASDAQ: COWN): 2.8 percent
  • BOK Financial Corporation (NASDAQ: BOKF): 2.7 percent
  • Top 5 Companies With Decreased Shares Shorted

  • Chubb Corp (NYSE: CB): -3.5 percent
  • HCI Group Inc (NYSE: HCI) : -3.5 percent
  • Walter Investment Management Corp (NYSE: WAC): -3.4 percent
  • Janus Capital Group Inc (NYSE: JNS): -1.9 percent
  • Fidelity Southern Corporation (NASDAQ: LION): -1.8 percent
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