The American hedge fund of the investor depicted in the Oscar-winning Hollywood film The Big Short has made a bet that the share price of the British bank Barclays will fall.
Neuberger Berman’s absolute return multi-manager fund, which reports investments made by Steve Eisman, disclosed a short position against Barclays worth $455,000 (£348,000) on 31 January in US regulatory filings.
A character based on Eisman was played by Steve Carell in The Big Short, which told the story of the few investors who predicted the collapse of the sub-prime mortgage market in the US, the trigger for the global financial crisis. The 2015 film, based on a book by Michael Lewis, won an Academy award for best adapted screenplay.
Eisman moved to New York-headquartered Neuberger Berman, which spun out of Lehman Brothers, in 2014 after reportedly helping FrontPoint, a subsidiary of Morgan Stanley, to double its assets to $1.5bn during the crash.
Neuberger Berman’s bet against Barclays adds to positions against Lloyds Banking Group and Royal Bank of Scotland, worth $446,000 and $529,000 respectively, which the hedge fund previously disclosed. Short-selling involves borrowing shares in a company and selling them with the expectation of buying them back at a lower price – and pocketing the profit.
The fund has increased its overall bet against big banks from about $3.3m to just under $5m, according to analysis by Breakout Point, the short data provider that uncovered the bet against Barclays. Other lenders being targeted by the firm include Spain’s BBVA, Italy’s UniCredit and France’s Société Générale.
Eisman has also bet millions against Canadian banks, including Royal Bank of Canada and Canadian Imperial Bank of Commerce, because of his belief that a slowing housing boom will dent earnings.
Eisman has described the positions against British banks as a “thematic bet” on disruption from Brexit.
While the newly disclosed bet against Barclays is not large relative to its market value, the short position will add to pressure on the bank, after it last week ousted its investment bank boss, Tim Throsby, after only two years in the job.
Barclays also faces the attentions of the activist investor Edward Bramson, who is reportedly pushing for it to cut back the investment bank to free capital for more profitable activities. Bramson met Barclays’ chief executive, Jes Staley, in mid-March following the bank’s annual report, but it is understood the investor did not make any strategy suggestions.
Eisman is launching a UK-domiciled fund that can bet on share prices gaining and falling. He has previously warned against investing in the UK because of uncertainty about Brexit and the possibility of Jeremy Corbyn becoming prime minister, which he believes would harm the British economy.
“Nobody has a freaking clue [on Brexit],” Eisman told Bloomberg in February. “The situation is so fluid that it will be foolhardy to take a large position either way.”
“Nobody can have a long-term view about the health of the UK economy if there’s a Brexit. But I do know that the assumption of UK investors is that if there’s a Brexit, the UK will go into a recession.”
He told the Telegraph last month that he would lose money if a Brexit withdrawal deal passes. If a deal is passed, some investors believe British bank share prices would rise, which would cost money for those investors with short bets.
Eisman is not the only investor betting against British banks. Metro Bank is currently the second most shorted stock in the UK, with at least 10.7% of its shares on loan to short sellers, according to data disclosed to the Financial Conduct Authority. Two investors also have declarable shorts against CYBG, which owns the Clydesdale and Yorkshire banks.
Eisman was not available for comment.
