Meet One of the Biggest Bears Against Deutsche Bank

Banking, finance, and taxes

Published: September 27, 2016 12:10 pm

Last Updated: January 13, 2020 3:05 am

Deutsche Bank A.G. (NYSE: DB) is in the midst of a crisis right now. This German bank is facing capital concerns, and it does not seem like there will be a light at the end of the tunnel in terms of a government bailout. Some are wondering what the best play on this stock is. One exchange traded fund is taking a very bearish perspective on the stock, and so far it’s been winning since the Deutsche Bank news break.

AdvisorShares Ranger Equity Bear ETF (NYSEMKT: HDGE) is fully taking advantage of Deutsche Bank’s fall from grace, with its largest position shorting the stock. The portfolio manager, Brad Lamensdorf, went as far to say, “We’ve been well aware of the bank’s dangerous capital shortfall and fact that it has done nothing to fix it.”

Overall, Lamensdorf thinks the bank’s shares will continue to drop despite the fact that they have sunk to record lows following reports over the weekend that the German government will not come to Deutsche Bank’s rescue. He says he is skeptical about the bank’s reassurances Tuesday that it won’t need to raise more capital nor need a government bailout.

Even further, Lamensdorf noted that the German economic research institute ZEW reported that Deutsche Bank had the highest potential capital shortfall, in a study of 51 European banks using U.S. Federal Reserve stress test methods.

He warns investors not to listen to some analysts who think this is not a Lehman Brothers situation and that the worst is over.

German Chancellor Angela Merkel has even weighed on the whole debate, ruling out state aid for perhaps the country’s largest lender.

Things have only gotten worse with the U.S. Department of Justice suggesting a $14 billion fine to settle claims against Deutsche Bank in regards to investigations of its mortgage securities.

Shares of Deutsche Bank were trading at $11.67 on Tuesday, with a consensus analyst price target of $11.18 and a 52-week trading range of $11.23 to $30.82.

Shares of the Ranger Equity Bear ETF were trading at $9.70. The 52-week trading range is $9.37 to $13.19.

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