Banking & Finance

FAS/FAZ Dealing With Billions of Dollars of Securities Sales from Members (FAS, FAZ, BBT, COF, PFG, WFC, USB)

The triple leverage ETF’s, the Direxion Financial Bull 3X Shares (NYSE: FAS) and Direxion Financial Bear 3X Shares (NYSE: FAZ), are perhaps the most volatile of all financial-stock ETF’s.  This morning they are getting to deal with a wave of secondary offerings and capital offerings from constituent member banks and financial firms.  These ETF’s are reacting to major “raising cash” filings and offerings from BB&T Corp. (NYSE: BBT), Capital One Financial Corp. (NYSE: COF), Principal Financial Group Inc. (NYSE: PFG), Wells Fargo & Co. (NYSE: WFC), and US Bancorp (NYSE: USB).

BB&T Corp. (NYSE: BBT) plans to repay its TARP obligations as well.  The trust bank has filed to sell about $1.5 billion in new stock, and plans to cutting its dividend by 68% to $0.15 to preserve cash in lower earnings.  BB&T shares are down almost 5% at $25.00 after the open.

Capital One Financial Corp. (NYSE: COF) sold 56 million shares of common stock at $27.75 to pay back TARP funds.  This comes on the heels that the stress test showed the bank did not need to raise funds.  Shares were down 11% after the open at $27.78.

Principal Financial Group Inc. (NYSE: PFG) was not one of the stress test institutions and is more of an insurance and asset manager than anything else.  But it is raising close to $1 billion via a sale of 42.25 million shares of common stock.  Shares are down 8% at $21.61 after the open.

Wells Fargo & Co. (NYSE: WFC) filed to sell 341 million shares of common stock to raise more than $7 billion (and more than $8 billion if overallotment comes in) and the use of proceeds is “for general corporate purposes.”  Because Raymond James upgraded the stock, its shares are “only down 2%’ at $27.56 shortly after the open.

US Bancorp (NYSE: USB) has filed to sell up to $2.5 billion in private capital via a common stock sale for TARP repayment more than anything.

As a result of all of these financials lower on offerings and after seeing profit taking in other major financial firms, we have the Direxion Financial Bull 3X Shares (FAS) down 9.8% at $11.32 and the Direxion Financial Bear 3X Shares (FAZ) up 8.9% at $4.90 at 9:47 AM EST.

JON C. OGG