Short Sellers Flocking to US Banks Are Risking a Painful Squeeze
- Strategists cite crowded positions, signs of seller exhaustion
- Some calls emerge for SEC to impose ban on short-selling
A Pacific Western Bank branch in Encino, California.
Photographer: Morgan Lieberman/BloombergThis article is for subscribers only.
Crowded equity trades and possible policy remediation for US regional banks may bring an end to a trade that’s roiled broader markets but proved lucrative for some short sellers.
After implosions of institutions like Silicon Valley Bank and First Republic Bank set the market on edge, the rout deepened Thursday, with the KBW Regional Banking Index extending this year’s decline to 31%. Fueling the losses was a report that PacWest Bancorp is exploring strategic options.