News analysis
Regulators seized First Republic Bank on May 1 and sold off its assets to JPMorgan Chase, wiping out the bank’s shareholders and making First Republic the third U.S. regional bank to fail this year.
But while depositors have been made whole and bank stockholders suffer sudden, catastrophic losses, short sellers in bank shares are winning big on one-way bets against America’s financial institutions. In the first two days of May alone, short sellers made $1.2 billion by betting against regional bank stocks. On May 4, short sellers booked another $379 million betting against First Horizon, PacWest and Western Alliance, according to Ortex, an analytics firm….