Steve Eisman: short Canada

Steve Eisman, the man who made his name by betting against the US housing market ahead of the subprime crash in 2008 now has Canada in his sites.

940_MW_P14_Guru

Steve Eisman, portfolio manager, Neuberger Berman Group

The man who made his name by betting against the US housing market ahead of the subprime crash in 2008 now has Canada in his sites. Steve Eisman, whose hugely profitable short-selling was made famous by the Michael Lewis book (then film), The Big Short, is quick to tell the Financial Times that his bet against the Canadian market is not on the same scale as his historic short on the US. "This is not The Big Short: Canada'. I'm not calling for a housing collapse."

Yet even just "a simple normalisation of credit" will have a big impact on Canada's banking sector, which has grown rather too used to soaring property prices. Like many stubbornly overpriced housing markets across the globe, Canada's has finally started to crack, with prices falling year-on-year nationwide in January, for the first time since 2009. Eisman hasn't singled out the specific "big six" Canadian banks he is shorting, but for now, the most popular target for short sellers is TD Bank, notes the FT. Others include CIBC and Bank of Montreal.

Eisman has been negative on Canadian banks for some time. As sceptical BMO economist Doug Porter tells Bloomberg, "we have heard this story many, many times before." Yet Crescat Capital one of the top hedge funds in the US last year is also shorting the banks. Not only do they have to contend with falling house prices, notes the fund, but Canadian firms are among the most vulnerable to recession in the world, with most failing to make enough free cash flow to support themselves.

Recommended

Andrew Hunt: why it's a great time to be a deep value investor
Value investing

Andrew Hunt: why it's a great time to be a deep value investor

Merryn talks to Andrew Hunt, author of Better Value Investing, about his adventures in the market's dark underbelly, looking for the hated and neglec…
22 Oct 2021
Back on track: why you should invest in railways
Share tips

Back on track: why you should invest in railways

Rail transport suffered a severe blow in the pandemic. But while post-Covid-19 working patterns may reduce revenue, trends in technology, long-distanc…
22 Oct 2021
Emerging markets: the Brics never lived up to their promise – but is now the time to buy?
Emerging markets

Emerging markets: the Brics never lived up to their promise – but is now the time to buy?

Twenty years ago hopes were high for Brazil, Russia, India and China – the “Brics” emerging-market economies. But only China has beaten expectations. …
18 Oct 2021
Three dividend stocks from the dynamic Asia/Pacific region
Share tips

Three dividend stocks from the dynamic Asia/Pacific region

Professional investor Sat Duhra of the Henderson Far East Income investment trust highlights three of his favourite stocks.
18 Oct 2021

Most Popular

How to invest as we move to a hydrogen economy
Energy

How to invest as we move to a hydrogen economy

The government has started to roll out its plans for switching us over from fossil fuels to hydrogen and renewable energy. Should investors buy in? St…
8 Oct 2021
Properties for sale for around £1m
Houses for sale

Properties for sale for around £1m

From a stone-built farmhouse in the Snowdonia National Park, to a Victorian terraced house close to London’s Regent’s Canal, eight of the best propert…
15 Oct 2021
How to invest in SMRs – the future of green energy
Energy

How to invest in SMRs – the future of green energy

The UK’s electricity supply needs to be more robust for days when the wind doesn’t blow. We need nuclear power, says Dominic Frisby. And the future of…
6 Oct 2021