Short sellers earned $2 billion U.S. in profits as the collapse of Silicon Valley Bank drove the share prices of other American regional lenders sharply lower over the past week.
According to data from S3 Partners, short sellers earned $2.29 billion U.S. from March 9 though March 13 as regional bank stocks fell the most since the onset of the pandemic in 2020.
The failure of Silicon Valley Bank and Signature Bank’s seizure by the U.S. government has caused turmoil in U.S. equity markets with the stocks of several regional banks falling more than 50% in only a few days.
Shares of major U.S. lenders such as Bank of America (BAC) and JPMorgan Chase (JPM) declined more than 10% over the last week before paring those losses in the wake of Silicon Valley Bank’s collapse, which is the second largest bank failure in U.S. history.
However, the declines in bank stocks have proven to be a windfall for short sellers. S3 Partners reports that 98% of each dollar short in the U.S. banking sector is now profitable.
For all of March, regional U.S. bank short positions total $3.5 billion U.S., according to S3 Partners.
How much short sellers booked in profits will depend on whether and when they exited their positions against the U.S. regional banks.
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