RBS short is working nicely, but I'm holding for much lower levels (3 pence or lower). I'm also short LLOY (LSE) which is LYG (NYSE). From memory the UK govt has 43% ownership, so it's possible that this could be another RBS type situation, where shareholders flee the stock because they fear nationalisation.
http://www.bloomberg.com/apps/news?pid=20601087&sid=a746r_1q9OOY&refer=home Roubini Predicts U.S. Losses May Reach $3.6 Trillion (Update1) By Henry Meyer and Ayesha Daya Jan. 20 (Bloomberg) -- U.S. financial losses from the credit crisis may reach $3.6 trillion, suggesting the banking system is âeffectively insolvent,â said New York University Professor Nouriel Roubini, who predicted last yearâs economic crisis. âIâve found that credit losses could peak at a level of 3.6 trillion for U.S. institutions, half of them by banks and broker dealers,â Roubini said at a conference in Dubai today. âIf thatâs true, it means the U.S. banking system is effectively insolvent because it starts with a capital of $1.4 trillion. This is a systemic banking crisis.â Losses and writedowns at financial companies worldwide have risen to more than $1 trillion since the U.S. subprime mortgage market collapsed in 2007, according to data compiled by Bloomberg. Bank of America Corp., the largest U.S. bank by assets, posted a quarterly loss of $1.79 billion last week, its first since 1991, and received $138 billion in emergency government funds. Citigroup Inc. posted an $8.29 billion fourth-quarter loss, completing its worst year, and plans to split in two under Chief Executive Officer Vikram Panditâs plan to rebuild a capital base eroded by the credit crisis. âBankruptâ System âThe problems of Citi, Bank of America and others suggest the system is bankrupt,â Roubini said. âIn Europe, itâs the same thing.â Stocks in Europe, Canada and Brazil dropped yesterday on speculation government efforts to shore up the financial industry will fail to stem the deepening global recession. The U.K.âs Royal Bank of Scotland Group Plc said it expects to post a loss of as much as 28 billion pounds ($41 billion) for 2008 and the government got ready to raise its stake in the lender. Oil prices will trade between $30 and $40 a barrel all year, Roubini predicted. âI see commodities falling overall another 15-20 percent,â Roubini said. âThis outlook for commodity prices is beneficial for oil importers, itâs going to imply that economic recovery might occur faster, but from the point of view of oil exporters, this will be very negative.â Oil has tumbled 77 percent from its July high of $147.27 as the global economy sinks into recession, straining the budgets of crude exporters. Saudi Arabia, Oman and Dubai, the second-largest sheikdom in the United Arab Emirates, have said they will post budget deficits this year. HSBC Holdings Plc said this week it is forecasting an average oil price of $45 a barrel for this year. Crude oil for February delivery traded as low as $33.18 a barrel, down 9 percent from last weekâs close, in after-hours trading on the New York Mercantile Exchange at 4:23 p.m. Singapore time. Last Updated: January 20, 2009 04:36 EST Positions in RBS, LLOY, C and BAC
In addition to positions in RBS, LLOY, BAC and C, I am watching the two big remaining Irish banks: NYSE symbols AIB and IRE LSE symbols ALBK and BIR However these two banks are only worth 400 to 550 million EUR each, or about 520 to 715 million USD each.
The whole damn list came down since September. If you short every one of them, you would've sitting in Bahamas now.
I've been short some of them at various times and with various position sizes. However apart from special situations like FRE / FNM, it's tough to hit home runs because: (1) Governments are spending a lot of money to address the problems with the banking sector, and governments have much greater resources than me (2) shorting bans in various countries at various times (3a) the most I can make on a short trade (without using puts) is 100% (3b) Puts can be expensive at times, particularly given #1 and #2 above
Updated list of shorting ideas: 21 January 2009 Main ideas: GM, GM and GM RBS, LLOY (LSE) / LYG (NYSE) other autos and auto related, especially F Other UK / Irish banks: BARC (LSE) / BCS (NYSE) NYSE symbols AIB and IRE LSE symbols ALBK and BIR have been bailed out but still could have some downside: FRE, FNM, AIG, C, BAC Other US Financials, particularly those with recent poor earnings reports and/or announcing that they need capital: RF (earnings bad), STT (earnings awful), HBAN (earnings bad), MI (earnings bad) SNV (needs capital) KEY, ZION, FITB, CNB, CRBC, STI, CMA, FBC Some 'trust banks' that need people to trust money market funds after the Reserve Fund debacle: BK, LM, NTRS credit cards (Daal has set out a good case regarding credit cards being the next bad thing) AXP, DFS, COF, WFC, JPM NB. WFC may also have WB issues, just as BAC has MER and CFC issues. insurers who rely upon positive returns from stocks: HIG, LNC, GNW monoline insurers ABK, MBI, XL, MTG, PMI, RDN retail M, TLB homebuilders: HOV, BZH REITs GGP, PLD, DDR CBL, AMB, NCT, CMO, MFA, KFN, AHT, NLY various stocks that might be burning cash and/or need to refinance debt: S, MOT, AMD, MU casinos LVS drybulk shippers DRYS newspapers NYT, GCI, WPO
FITB earnings ugly on 22 January HBAN earnings ugly on 22 January BPOP earnings ugly on 22 January However before shorting these stocks, it's important to remember that the US govt will influence share prices: http://www.elitetrader.com/vb/showthread.php?s=&threadid=151469 It could be that FITB, HBAN, BPOP (and RF, MI and SNV) could be considered to small to save, rather than "too big to fail", which is the phrase often used for BAC and C. Either way, caution is warranted when shorting US bank stocks, especially given the share price declines since the start of the year.
Although CNBC is often just a bunch of people talking over each other, Bob Pisani has been making some good points about insurers today HIG, LNC, GNW, PRU, AFL, MET, PFG They are probably losing a lot of money in equities and dodgy structured investments