The ‘Winners’ of Banking Storm: Hedge Funds Profit Over 7 Billion Through Short Selling

MILAN – During the turbulent March that the financial markets experienced, with the storm that first hit Svb and other medium-sized American banks and then touched Credit Suisse, brushing for an instant even Deutsche Bank, there are those who have uncorked bottles of champagne. They are the hedge funds who have “bet” against the banking sector, short selling the securities of institutions, and thus obtaining profits from the sharp fall in quotations. A move that according to the Financial Timesciting data from the financial analysis company Ortex, would have made speculative funds worth 7 billion dollars.

In particular, the so-called short sellers, i.e. those who borrow securities that they do not have in order to resell them and then buy them at a lower price, according to the Ft would have accumulated 1.3 billion in profits thanks to the collapse of Svb, to which would be added 848 million from the “bets” against First Republic and 684 from the Credit Suisse debacle. Counting all operations of this type on the US and European banking sector, the figure would reach 7.2 billion dollars.

“March was the most profitable month for short-sellers in the banking sector since the 2008 financial crash,” he said. Peter Hillerberg, co-founder of Ortex, quoted by the Financial Times. Although bank stocks also fell sharply in early 2020 amid the outbreak of the coronavirus pandemic, fewer funds had sold short at the time, he added. Barry Norrischief investment officer of Argonaut Capital, said he had a “stellar” month, thanks to the “bets” against banks such as Credit Suisse and First Republic and his fund Argonaut Absolute Return gained more than 6% in this period.