Short Interest In Banks Continues to Decline (BAC, USB, JPM, C)

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C Hot Sheet

Overall Analyst Rating:
BUY ( Down

Down)

Dividend Yield: 0.1%
EPS Growth %: +850.0%

Deutsche Bank issued an interesting note on short interest in banks stocks. The firm noted that bank stock short interest, ex-Citi (NYSE: C), was down 14% in the second half of May. Over this time period bank stocks rose 1% on average. Deutsche Bank said short interest in banks stocks is 35% below the all time high in August 2008.

The firm noted the largest declines in short interest during the last two weeks of May were at Bank of America (NYSE: BAC) (-40%), BB&T (NYSE: BBT) (-31%), PNC (NYSE: PNC) (-20%) and US Bancorp (NYSE: USB) (-20%). The largest increases were at Comerica (NYSE: CMA) (+21%), Marshall & Ilsley (NYSE: MI) (+21%), Regions Financial (NYSE: RF) (+17%) and Synovus Financial (NYSE: SNV) (+16%).

Short interest/float was highest at M&T Bank (NYSE: MTB), TCF (NYSE: TCB), Zions Bancorp (Nasdaq: ZION) and Citi (NYSE: C), while JP Morgan (NYSE: JPM), Bank of America (NYSE: BAC) and Wells Fargo (NYSE: WFC) had the lowest short interest/float.

Deutsche Bank also noted that trading volume in bank stocks was down 22% on average for the last two weeks of May. They also think based on their 2011 earnings estimate, bank stocks on average trade at an expensive 12-13x.

Short Interest Chart (From Deutsche Bank Via FactSet)