Short sellers are taking aim at regional banks, seeing windfall profits of $3.53 billion so far in March — at least on paper. -Dlight News

Short sellers are taking aim at regional banks, seeing windfall profits of $3.53 billion so far in March — at least on paper.

Short sellers targeting U.S. regional-bank stocks are looking at windfall profits of $3.53 billion so far in March — and more than $2.29 billion in just the last three days of trading — according to data analytics company S3 Partners Research, which tracks short-terms. Sale of data. It is, at least on paper, based on their mark-to-market status. A short position is a bet that a stock will fall. That comes after the collapse of three banks over the past week — Silicon Valley Bank SIVB, , Signature Bank SBNY, -22.87% SBNY, -22.87% and Silvergate Capital — which sent the SPDR S&P Regional Banking Sector ETF KRE, -2.18% down. Down 23% from March 8 to March 13. See also: Gensler, head of the SEC, promised an investigation into the bank’s failures. Regional banks rallied on Tuesday after the Federal Reserve intervened in backstop deposits over the weekend, but that rally dissipated early Wednesday amid more bad news for the sector. That includes a Bloomberg report that Bank of America received more than $15 billion in fresh deposits in recent days as customers pulled funds from regional banks and systemically important too-big-to-fail financial institutions. See also: Regional banks are seeing a flight of deposits to too-big-to-fail megabanks after Credit Suisse’s CSGN, -22.21% stock tumbled to record lows after its largest shareholder, Saudi National Bank, declined to invest more in the bank, Bloomberg reported. Interview on Wednesday. The Saudi bank only has a 10% stake in Credit Suisse, and crossing that threshold would subject it to the new rules. On Tuesday, Credit Suisse said in its annual report that it had material weaknesses in financial controls. Credit Suisse has lost money for five straight quarters and its wealthy clients withdrew nearly $100 billion from the bank in the fourth quarter. Shares of Credit Suisse fell as much as 31% to break below the 2-franc level, bringing their 12-month decline to 78%. The move weighed on bank stocks across Europe, adding to the jitters from last week in the US. Silicon Valley bank parent SVB Financial Group and Signature Bank are both among the top 20 most shorted stocks in the regional-banking sector, according to S3. The most shorted stock is PNC Financial Services PNC, -4.19% PNC, -4.19% where short interest totaled $724 million, or about 1.38% of the overall float. From the archives: Short sellers aren’t evil, but they’re misguided “We’ve seen an increase in short selling in the sector over the past seven days with $416 million in new short selling partially offsetting the $3.9 billion decline in shorted share prices,” S3 wrote. Commentary For now, with Silicon Valley Bank and Signature Bank trading halted, shorts that were unable to exit their positions before the halts remain to pay daily stock-borrow financing rates. Short positions remain open until Nasdaq and the Depository Trust Company determine that the stock is delisted and worthless, “providing for technical close outs of long and short positions, or the short seller’s prime broker finds. [over-the-counter] Trade with the long shareholder.” Short sellers at Silicon Valley Bank and Signature Bank are “sitting big on mark-to-market profits but they have no way to get those profits at the moment,” they noted. Separately, some Robin Hood, – 0.60% of users said the company does not allow them to sell put options or pay for contracts taken on Silicon Valley Bank or Signature Bank, Forbes reported. The options are set to expire on Friday, but the shares are no longer trading, for Robinhood to satisfy the agreement. It’s hard to buy. Robinhood did not return Forbes’ request for comment. Other retailers said Fidelity followed suit, Forbes reported. Fidelity also did not return Forbes’ requests for comment.

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