While shareholders of Silvergate, Silicon Valley Bank and Signature Bank of New York have seen their investments drop to zero, short sellers who bet against the banks have made out like, well, bandits.
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According to Ihor Dusaniwky and Matthew Unterman of S3 Partners, regional banking short sellers are up $3.53 billion on mark-to-market profits for the first two weeks of March. More than $2.29 billion of those profits came in the final three trading sessions of last week.
Interestingly, neither Silicon Valley Bank nor Signature Bank was among the most shorted regional banking stocks. Here is S3’s list of the top 15, based on the dollar value of short sales. First Republic Bank (NYSE: FRC), which has rattled markets this week, ranked 20th as of March 14.
| Name | Ticker | Float Short | Short Value |
|---|---|---|---|
| PNC Financial | PNC | 1.40% | $724,064,049 |
| Huntington | HBAN | 3.62% | $574,513,621 |
| Regions Financial | RF | 2.76% | $484,897,230 |
| First Horizon | FHN | 5.67% | $480,795,760 |
| Truist | TFC | 1.08% | $462,012,418 |
| Fifth Third | FITB | 2.22% | $397,070,730 |
| Silicon Valley Bank | SIVB | 5.50% | $343,169,723 |
| Citizens | CFG | 2.16% | $318,930,567 |
| M&T Bank | MTB | 1.28% | $271,807,194 |
| Bank OZK | OZK | 5.97% | $251,766,293 |
| Columbia | COLB | 5.86% | $244,350,803 |
| KeyCorp | KEY | 2.11% | $222,604,123 |
| Signature Bank | SBNY | 5.41% | $220,827,362 |
| Webster | WBS | 3.33% | $215,434,676 |
| First Financial | FFIN | 5.57% | $214,526,161 |
It could have been even better for short sellers except there was a limited supply of shares available to them. The typical borrow fee for short sellers was 0.3%. The borrow fee for Silicon Valley Bank soared to 5.31%, while the fee to borrow shares of Signature Bank rose to 3.06%.
The seven-day increase in short interest was largest for Huntington Bancshares Inc. (NASDAQ: HBAN). The largest seven-day increase in short sales covered was Signature Bank, followed by M&T Bank Corp. (NYSE: MTB).
The following table shows the most profitable short sales for the first two weeks of March.
| Name | Ticker | Average Short Interest | YTD Mark-to-Market Profit | YTD profit |
|---|---|---|---|---|
| Silicon Valley Bank | SIVB | $660,312,497 | $791,947,229 | 119.94% |
| Silvergate | SI | $129,238,091 | $246,636,087 | 190.84% |
| First Republic | FRC | $554,258,145 | $210,515,618 | 37.98% |
| Signature Bank | SBNY | $358,968,632 | $155,799,042 | 43.40% |
| First Horizon | FHN | $626,598,681 | $136,210,351 | 21.74% |
| Truist | TFC | $616,559,183 | $114,761,105 | 18.61% |
| PNC Financial | PNC | $775,416,866 | $109,227,441 | 14.09% |
| Huntington | HBAN | $685,781,430 | $92,675,322 | 13.51% |
| Fifth Third | FITB | $466,767,457 | $81,733,435 | 17.51% |
| Regions Financial | RF | $579,587,618 | $80,156,492 | 13.83% |
| Citizens | CFG | $377,111,203 | $72,746,253 | 19.29% |
| Columbia | COLB | $329,950,023 | $69,940,440 | 21.20% |
| Western Alliance | WAL | $175,084,997 | $65,805,989 | 37.59% |
| Bank OZK | OZK | $286,304,056 | $64,053,576 | 22.37% |
| PacWest | PACW | $95,172,691 | $62,535,154 | 65.71% |
S3 partners also noted, “SIVB and SBNY short sellers are sitting on massive mark-to-market profits but have no way to realize those profits at the moment.” Unfortunately, the number of long shareholders drops to zero when the shares are finally delisted and become worthless.
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