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.
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.
Subscribe to MoneyWeek
Subscribe to MoneyWeek today and get your first six magazine issues absolutely FREE
Sign up to Money Morning
Don't miss the latest investment and personal finances news, market analysis, plus money-saving tips with our free twice-daily newsletter
Don't miss the latest investment and personal finances news, market analysis, plus money-saving tips with our free twice-daily newsletter
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.
-
Private school fees soar and VAT threat looms – what does it mean for you?
Rising private school fees could see more than one in five parents pull their children out of their current school. Before you remortgage, move house or look to grandparents for help, here’s what you need to know.
By Katie Williams Published
-
Best and worst UK banks for online banking revealed
When it comes to keeping your money safe, not all banks are equal. We reveal the best and worst banks for online banking when it comes to protecting your money from scams
By Oojal Dhanjal Published