Hedge funds to profit from bank stock rout, says Goldman
Hedge funds are set to profit from the rout in bank stocks triggered by the sudden demise of Silicon Valley Bank and Signature Bank thanks to bearish positions against the banking sector, according to a report by Reuters.
The report cites a client note issued by Goldman Sachs late on Sunday as revealing that as well as having sold financially themed shares and banks for nine straight weeks, hedge funds added short positions on Friday, rather than just exiting their long bets.
According to data from Goldman Sachs' prime brokerage division, financials was the most net sold sector globally.
Following SVB's collapse, world equities fell on Monday while banking shares slid further even after US authorities agreed to guarantee all deposits at SVB, 95% of which – worth around $150 billion – were uninsured as the standard Federal Deposit Insurance Corporation guarantee only covers deposits up to $250,000.