Eisman shorts HSBC and STAN

[Fluke]

I’m the same re shorting tbh. Thanks for your efforts Fluke, I wasn’t knocking you at all.

Ian.

Not at all Ian, all comments welcome.

[Arborbridge]

MoS if you please and hey it was free in Costa. Thanks for your thoughts arb, I'll see what else I can find. I suffered heavy losses with Carillion so bit jumpy these days when it comes to topping up.

I'm releived to hear the DM was free CLLN was a nasty one, but for a long time, you would probably find the shorting was similar to Greene King, and that turned out relatively well. CLLN shorting was ok to high for a while but the share price and company didn't collapse at that point and all might have been well - llike Greene King.

I think you need to read it with much more detailed information, or some sort of smell factor and knowledge in the way that Dod does. Personally, I am not good at picking up on whether such nuances as Dod finds are important or not.

Arb.

[Dod101]

Carillion was in trouble with or without any reports of shorting, or put another way it was obvious to most surely that Carillion was in trouble even without reports of shorting. It was in the wrong sector, had had a series of profit warnings and finally was scrabbling around trying to find cash. That is not the case with either of the banks mentioned. HSBC in particular is bound to be affected by the Hong Kong situation if it carries on (although I have not read much about that for a week or two - just waiting for 1 October when we can expect demos for China's National Day.)

The Mail on Sunday/Daily Mail is certainly not a very reliable source and not to be taken too seriously. HSBC's share price is down 1.6% or so today but that is not very significant. However caution is I think probably sensible at least in the short term on account of the HK and Middle East situation. HSBC is quite strong in both localities. Next results are not due until February 2020 so not much help there. I do not think though that is another Carillion.

Dod

[Arborbridge]

Carillion was in trouble with or without any reports of shorting, or put another way it was obvious to most surely that Carillion was in trouble even without reports of shorting. It was in the wrong sector, had had a series of profit warnings and finally was scrabbling around trying to find cash. That is not the case with either of the banks mentioned. HSBC in particular is bound to be affected by the Hong Kong situation if it carries on (although I have not read much about that for a week or two - just waiting for 1 October when we can expect demos for China's National Day.)


Dod

And the extent to which it was scrabbling around to find fresh cash was hidden from shareholders by aggressive, and allegedly illegal or near illegal accounting practices. The major shareholders and commentators either did not realise the extent of this or did not wish to reveal it, so I doubt that any ordinary observer could have known either.
In that case, I hardly think the word "obvious" can be applied

[Gengulphus]

Following the collapse of Carillion someone suggested adding shorting in some form or other to their list of selection criteria when adding a new share or topping up. I thought of this today as have been thinking of topping up HSBC but read in today's paper that Steve Eisman of Big Short fame has shorted HSBC and Standard Chartered because of what's going on in Hong Kong.

Thinking I might hang back, any thoughts?

Yes - take a look through viewtopic.php?f=15&t=10218, which was started on 20 February 201 (a bit over a month after the death knell for Carillion) and look at a share price chart for the company it's about from that date to today. It's a long thread, but you might find the exercise instructive as regards the significance (or otherwise) of shorting levels as a HYP share safety check...

What's going on in Hong Kong is a rather different issue and I don't feel I understand enough about it to be able to come to a firm conclusion about how it might affect HSBC. But it's a huge bank with operations all over the world, so I'd be surprised if even dire events there hugely affected HSBC - the range of my uncertainty is between barely noticeable and a sizeable but not crippling blow to the company.

On the other hand, Hong Kong events might greatly affect market sentiment towards HSBC shares, so shorting its shares might be an astute play on investor psychology, rather than on the company's health. If so, it's a type of short-term capital-gain-oriented play that is totally at odds with the nature of HYP strategies. Though it might prove useful for HYPers, as the share price trough caused by an unsuccessful shorting attack on a company's shares is an excellent HYP buying opportunity - provided that (a) one can reasonably reliably distinguish the unsuccessful shorting attacks from the successful ones; (b) one can reasonably reliably determine when the low point of the share price trough is reached; and (c) one can do both (a) and (b) without the benefit of hindsight!

Standard Chartered is probably similar, but I don't own it and haven't been in the market for another bank for many years now, so my up-to-date knowledge of it is too sparse to really say that with any conviction.

Gengulphus

[OhNoNotimAgain]

I do not think though that is another Carillion.

Dod

Oh, well that's all right then, we can all relax.

PS

It's a bank, no one has a sodding clue about what is going on, has nobody read "The Big Short" or "Crashed"

https://www.amazon.co.uk/Crashed-Decade ... 502&sr=8-3

[AJC5001]

It was in yesterday's Mail on Sunday, the financial section, big headline "Big Short Investor targets UK banks in Hong Kong Crisis".

The article refers to Eisman's newly formed Absolute Alpha fund and that he has taken out a short position worth £1.4 million against Stan and that there is a video update on the firms website (I couldn't find it) where he says he is shorting HSBC.

In case anyone wants to read it, this seems to be the article concerned.
https://www.dailymail.co.uk/money/markets/article-7464315/Big-Short-investor-targets-Standard-Chartered-HSBC-bid-cash-Hong-Kong-crisis.html

Adrian

[Dod101]

I do not think though that is another Carillion.

Dod

Oh, well that's all right then, we can all relax.

Yes I think we can in comparison with Carillion. I think I know enough about the culture of HSBC for it not to be another Carillion. It is very well capitalised, quite conservative and well run I think. What bothers me is,. as I have said, the HK and middle east situation. It has a very large share of the HK retail and for that matter commercial market in Hong Kong and of course is a very big trade financing bank. All of these areas could well be affected by the HK situation if it carries on but it is not in HK's interests or for that matter China's to let that happen. Standard Chartered is much smaller in HK but I know much less about it as I have never held it nor had much interest in it.

I am not sure I would put a lot into HSBC shares at the moment until we see how the situation develops, although it is my second or third largest holding and I am happy to leave it like that.

Dod

[monabri]

According to "Market Watch" (MW) - (link below) - the total 'stock' being shorted is 0.23% on the US market which is where I assume Mr Eisman would be operating. I have no further details on how many companies comprise this 0.23% but the overall level is, I feel, negligible.

https://www.marketwatch.com/investing/stock/hsbc

For comparison, I entered the tickers of some big US companies on the MW website to look at their reported shorting levels

Microsoft = 0.61%
Pfizer = 1.07%
Apple = 0.88%
IBM = 1.82%
Tesla = 29.94% (twenty-nine + %)