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

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)

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