Hedge funds do "drive by" on big banks

Christopher Joye

Coolabah Capital

In The AFR I track the global hedge funds' "drive by" on the big banks over the last week, which involved an incredibly savvy media management campaign and triggered the largest "puke" in major bank spreads seen since the global financial crisis. Excerpts below: "The financial market impact of this public relations exercise was truly astonishing. The major banks’ share prices plummeted up to 4 per cent on the day of the AFR’s yarn, wiping out as much as $15 billion in shareholder value. Overnight a European investment bank told clients that there was “massive short-selling interest in the major banks [after the media coverage], and it all seemed to be based on misplaced views” of Aussie housing, which was triggering “mayhem”. The next morning a domestic market-maker reported that there was “carnage here in [major bank] senior CDS, with Fast$ [hedge funds] jumping on the short trade after the Bronte Capital piece yesterday. “The action in Bank CDS today would make one think there is a bank run going on in Australia,” he grimly surmised. Free here (VIEW LINK)

Christopher Joye
Portfolio Manager & Chief Investment Officer
Coolabah Capital

Chris co-founded Coolabah in 2011, which today runs $7 billion with a team of 33 executives focussed on generating credit alpha from mispricings across fixed-income markets. In 2019, Chris was selected as one of FE fundinfo’s Top 10 “Alpha...

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