Short Sellers Post Profits of $3.5 Billion on Banks' Woes

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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.
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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