There is plenty of commentary at the moment that the weakness in the bank stocks is very much the result of hedge funds shorting them. And no doubt this commentary has a solid foundation. But is there anyone with insight into how this might work for them. Are they banking on jittery market sentiment to get punters on board and send the price even lower still so that when they have to cover their shorts, they can do so at bargain prices. Do they really think our banks are over-valued? Is it a currency play?
I remember when things started to look bad in 2008 for Lehman Bros, a big hedge was very publicly shorting them and no doubt played a role in their ultimate demise. But surely no-one thinks our banks are this vulnerable.