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Hedge funds cut short positions on US regional banks

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Hedge funds have cut their short wagers against US regional banks and a have now adopted a more bullish stance on the US financial sectors on the whole, just as banking stocks have begun to rise, according to a report by Reuters.

The report cites an investor note from Goldman Sachs’ prime brokerage division as revealing that US financial services companies, including banks, trading firms and those working in capital markets, were among the most sought-after stocks in the week ended 1 September.

According to Goldman, the ratio of long trades compared with short positions on US regional banks has risen by 26% since a year low in mid-July 2023, when traders were mostly short the sector. An index of US regional bank stocks meanwhile, has recovered roughly 20% of its value aft it slumped to a two-year low in the wake of the collapse of Silicon Valley Bank, Signature Bank and First Republic.

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