There are a lot of rumors from traders that repo desks are continuing to call in shares used to short financials such as Citi and AIG.
This is causing a forced covering of all financial shorts and it’s becoming impossible to put on new short transactions.
Hey folks, look out what you’re doing there…
This is the Volkswagen thing all over again. And even better. Because this move seems to become self feeding.
This is what the Wall Street Journal wrote last week.
Hedge funds rushed in to buy preferred shares of Citigroup after the New York bank announced last month that it would convert preferred shares into common stock. The fast-money crowd hoped to scoop up a quick profit based on the attractive conversion terms being offered by Citigroup to preferred shareholders, including the government.Now, though, the hedge funds are licking their wounds. The reason: Their strategy of buying Citigroup preferred shares while selling short the common stock backfired. Since March 5, the price of Citigroup common shares has tripled, including a 23% jump Wednesday that left the stock at $3.08 in 4 p.m. New York Stock Exchange composite trading.
This is causing a forced covering of all financial shorts and it’s becoming impossible to put on new short transactions.
Hey folks, look out what you’re doing there…
This is the Volkswagen thing all over again. And even better. Because this move seems to become self feeding.
This is what the Wall Street Journal wrote last week.
Hedge funds rushed in to buy preferred shares of Citigroup after the New York bank announced last month that it would convert preferred shares into common stock. The fast-money crowd hoped to scoop up a quick profit based on the attractive conversion terms being offered by Citigroup to preferred shareholders, including the government.Now, though, the hedge funds are licking their wounds. The reason: Their strategy of buying Citigroup preferred shares while selling short the common stock backfired. Since March 5, the price of Citigroup common shares has tripled, including a 23% jump Wednesday that left the stock at $3.08 in 4 p.m. New York Stock Exchange composite trading.
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