Banking, finance, and taxes

Why Are Short Sellers Making Big Bets Against Major Banks?

Chris Lange

Published: December 28, 2017 10:40 am

Last Updated: January 12, 2020 5:02 am

The financial sector was a major part of the Great Recession, and it has been a major part of the recovery and raging bull market since then. Generally speaking, the major financial institutions within this country are a good barometer of the current state of U.S. markets.

So when short sellers make a play against these major banks, they are effectively betting for a downturn, and conversely when they back off they might be expecting a surge. Granted, some plays are directly against individual companies, like we saw with Wells Fargo early in 2017.

The December 15 short interest data have been compared with the previous figures, and short interest in most of these selected bank stocks increased.

Bank of America Corp. (NYSE: BAC) saw its short interest jump to 151.13 million shares. The previous level was 135.34 million. Shares were last seen trading at $29.78, in a 52-week range of $21.77 to $30.03.

The number of JPMorgan Chase & Co. (NYSE: JPM) shares short increased to 29.00 million from the previous level of 26.68 million. Shares recently traded at $107.27, in a 52-week range of $81.64 to $108.46.

Citigroup Inc. (NYSE: C) short interest increased to 33.22 million from the previous level of 26.91 million. Shares were trading at $75.11, in a 52-week range of $55.23 to $77.92.

Wells Fargo & Co. (NYSE: WFC) short interest increased to 42.62 million shares from the previous reading of 34.53 million. Shares were trading at $61.29, within a 52-week range of $49.27 to $62.24.

Short interest in Goldman Sachs Group Inc. (NYSE: GS) increased slightly to 6.67 million shares from the previous 6.57 million. The stock recently traded at $256.29, within a 52-week range of $209.62 to $262.14.

Morgan Stanley (NYSE: MS) short interest for this settlement date decreased to 15.39 million shares from the previous 14.25 million. Shares were changing hands at $52.66, in a 52-week range of $40.06 to $54.25.