New York (HedgeCo.Net) – Billionaire and hedge fund manager extraordinaire John Paulson has reportedly pocketed $139 million by betting against the Royal Bank of Scotland, further fueling cynicism that shorting aids in driving down share prices.  

Paulson is no stranger at predicting trends and shorting companies that he feels fit.  Late last year, his New York-based Paulson & Co. disclosed short positions in the British mortgage lender HBOS, Barclays and Lloyds TSB.

Investors turn to Paulson because he seems to have a knack for placing bets that he feels will turn out in his favor.  Paulson infamously bet against the U.S. housing market in 2007, which garnered himself a $3 billion paycheck while returns on his hedge funds continued to rise.  In 2008, when most hedge funds lost an average of 15 percent on the year, Paulson’s funds kept steady, with his Advantage Plus fund up 20 percent.

While some argue that the practice of shorting is responsible for driving down share prices, many feel that is an unfair assumption.  The ban on short selling that was enacted last September in the UK was finally lifted earlier this month, although short positions are still required to be disclosed.  The Financial Services authority has said they would reinstate the ban if it proved to be needed.

Julie Scuderi
Senior Editor for HedgeCo.Net
Email: julie@hedgeco.net

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Tags: accredited-investors, barclays, billionaire, cynicism, hbos, hedge-fund-manager, hedgeco, housing-market, john paulson, knack, last-september, lloyds tsb, mortgage-lender, paycheck, royal-bank-of-scotland, share prices, sister-sites

LONDON (Reuters) – Hedge funds may have missed out on sharp falls in banks’ shares in recent days because few rushed in after the UK’s ban on short selling financial stocks expired on Friday, data shows.

According to figures from research firm Data Explorers, the amount of stock out on loan — a good indication of how much a stock has been sold short — did not increase on Friday in Royal Bank of Scotland and actually fell in HBOS.

Stock out on loan in HSBC, Lloyds TSB and Barclays rose only slightly.

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Tags: banks, barclays, explorers, financial stocks, hbos, hsbc, lloyds tsb, london-reuters, royal-bank-of-scotland, stock

nebusiness.co.uk – LLOYDS Banking Group became the latest casualty of the bank sector sell-off yesterday as its shares plunged as much as 47%.

Royal Bank of Scotland steadied a little after Monday’s mammoth 67% fall, but doubts over the Government’s second bank bail-out and renewed fears for the sector’s health dragged its rivals lower.

Lloyds, created this week from the merger of HBOS and Lloyds TSB, was the worst hit, followed by Barclays down nearly 20%.

The falls extend losses across the sector in light of news that RBS expects to report record annual losses, but also comes in the wake of the recent expiry of the short-selling ban.

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Tags: banking-group, barclays, casualty, doubts, expiry, fears, hbos, health, lloyds tsb, losses, merger, rbs, rivals, royal-bank-of-scotland