Advertisement

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."

Advertisement - Article continues below

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.

Advertisement
Advertisement

Recommended

The British equity market is shrinking
Stockmarkets

The British equity market is shrinking

British startups are abandoning public stockmarkets and turning to deep-pocketed Silicon Valley venture capitalists for their investment needs.
8 Nov 2019
Share tips of the week
Share tips

Share tips of the week

MoneyWeek’s comprehensive guide to the best of this week’s share tips from the rest of the UK's financial pages.
7 Aug 2020
BP has slashed its dividend – and markets love it
Income investing

BP has slashed its dividend – and markets love it

BP has bowed to the inevitable and cut its dividend in half – and its share price promptly rose. John Stepek explains what it means for shareholders …
4 Aug 2020
Listed companies are dying out, and that could have serious consequences
Stockmarkets

Listed companies are dying out, and that could have serious consequences

Private equity is taking over from public stockmarkets as the biggest provider of capital to companies. That’s bad for investors and bad for society a…
3 Aug 2020

Most Popular

Don’t despair on dividends – these companies could be set to bring them back
Income investing

Don’t despair on dividends – these companies could be set to bring them back

The value of dividends paid out by UK stocks has plummeted this year as companies “rebase” their payment policies. But things could soon start to look…
6 Aug 2020
Gold hits the big $2,000 level – are Aim miners about to play catch up?
Gold

Gold hits the big $2,000 level – are Aim miners about to play catch up?

With the price of gold shooting through $2,000 an ounce, the yellow metal looks unstoppable. Things are so bullish, even Aim-listed junior gold miners…
5 Aug 2020
Too embarrassed to ask: what is “real return”?
Too embarrassed to ask

Too embarrassed to ask: what is “real return”?

MoneyWeek's latest "too embarrassed to ask” video explains what a real return is and why it's so important for investors.
5 Aug 2020