Short sellers are targeting Toronto-Dominion Bank (TD), betting $3.7 billion U.S. that the Canadian lender’s stock will decline going forward.
According to an analysis by S3 Partners, Toronto-Dominion Bank has attracted one of the biggest short positions among bank stocks in recent weeks.
Currently Toronto-Dominion Bank is third on a list of the 20 most shorted U.S. and Canadian financial firms, according to S3 Partners.
The short position in Canada’s second biggest bank is partly due to ongoing concerns with the global banking sector after several U.S. regional banks failed and Europe’s Credit Suisse (CS) was taken over by rival UBS Group (UBS).
However, short sellers have also targeted Toronto-Dominion Bank because of its exposure to Canada’s slumping housing market, as well as its sizable stake in Charles Schwab (SCHW) and its efforts to buy U.S. regional bank First Horizon Corp. (FHN).
TD is currently in the process of trying to close a $13.4 billion U.S. deal to acquire First Horizon Corp., which would expand its presence in the American market.
Toronto-Dominion Bank also holds a 10% stake in Charles Schwab, which recently lost $47 billion U.S. in market value as it came under scrutiny over its unrealized bond losses.
In March, Toronto-Dominion Bank’s stock declined 11%, which was the biggest drop in the TSX Banks Index.
Over the past year, Toronto-Dominion Bank’s share price has declined nearly 20% to trade at $81.41 per share.
