Abstract:TD Bank Group's short interest has surged to $6.1 billion, a 45% increase, due to concerns surrounding its acquisition of First Horizon amid the collapse of U.S. regional lenders. Arbitrage investors betting on the deal are believed to be behind the heightened short interest. TD will address the $13.4 billion acquisition at its annual general meeting.
Short interest in TD Bank Group (TD.TO) soared to $6.1 billion on Wednesday, a 45% increase from two weeks ago, as per ORTEX data calculations. The spike comes just before the Canadian lender's annual general meeting and is primarily attributed to TD's planned acquisition of U.S. lender First Horizon (FHN.N).
The collapse of U.S. regional lenders Silicon Valley Bank and Signature Bank last month has intensified scrutiny of the transaction. Consequently, some shareholders have urged TD to abandon the deal or renegotiate for a lower price. Analyst James Shanahan of Edward Jones believes that arbitrage investors betting on the First Horizon deal are responsible for the heightened short interest, as the market is concerned about the deal's likelihood of completion.
Arbitrage investors, often event-driven hedge funds, bet on mergers and acquisitions by purchasing shares of the target company and shorting the acquirer's stock. Analyst Lemar Persaud of Cormark Securities points to the uncertainty surrounding the First Horizon deal closure and its potential cost as the primary factor influencing short interest. Persaud also notes that the failures of SVB and Signature Bank have raised concerns due to TD's significant retail operations.
TD Bank is expected to address the $13.4 billion acquisition of First Horizon during its AGM on Thursday in Toronto, as it awaits regulatory approval. Hedge funds have shorted approximately 5.5% of TD's outstanding shares, while the second-most shorted bank stock, Bank of America (BAC.N), had only $2.9 billion or 1.2% worth of short bets.
Short-selling involves hedge funds borrowing stock from institutional investors and selling it back when the price falls, profiting from the difference. TD shares have dropped 0.1% since the U.S. regional banking crisis began but have risen 3.4% this week.
While the Bank of Montreal (BMO.TO) and Royal Bank of Canada (RY.TO) also have exposure to the U.S. banking system, they had around $2.1 billion and $2.2 billion worth of shares out on loan, respectively, as per ORTEX data. A TD spokesperson declined to comment on the matter.
Download and install the WikiFX App on your smartphone to stay updated on the latest news.
Download the App: https://social1.onelink.me/QgET/px2b7i8n
Disclaimer:
The views in this article only represent the author's personal views, and do not constitute investment advice on this platform. This platform does not guarantee the accuracy, completeness and timeliness of the information in the article, and will not be liable for any loss caused by the use of or reliance on the information in the article.
Many businesses have either had financial difficulties in the last year or have completely stopped operating. Among other things, shortages and several forex-related losses have been the main reasons of these occurrences. Many manufacturing company’s losses up to trillions of Naira as a result of the currency's depreciation.
The Australian Securities and Investments Commission (ASIC) has flagged a concerning trend in financial fraud, cautioning investors about a sophisticated scam targeting bonds and term deposits.
Interactive Brokers expands its product suite with Daily Options on the CAC 40 index, providing investors with more tools for short-term trading strategies.
In a cautionary tale that reverberates through the digital trading landscape, Moideen, found himself ensnared in the web of deception spun by Spring FX Signals.