AQR, Marshall Wace Lead Hedge Funds To Benefit From Europe Bank Slide | 8/21/2019 | Staff
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LONDON (Reuters) – AQR of the United States and Marshall Wace of Britain are among hedge funds to have taken sizeable positions over the past month to benefit from perceptions of European banks’ vulnerability to recession.

Reuters analysis of short positions across European banking stocks in the EuroSTOXX Banks Index as at Aug. 19 showed six institutions were the object of bets large enough to warrant disclosure.

Trade - Fund - Shares - Holder - Pension

In a short trade, a fund pays to borrows shares from a long-term holder such as a pension fund and sells them into the market, hoping to buy them back after they have fallen in value and return them at a profit.

AQR Capital Management, a systematic fund house held a combined 6.01% across several of the six banks, while Marshall Wace, which uses both fundamental and systematic research processes, owned 4.87%.

Managers - Filings - Lansdowne - Partners - Position

Active managers captured in the regulatory filings include Lansdowne Partners, with a combined position of 3.06% and Oceanwood Capital, with 1.27%.

Of the 26 stocks in the EuroSTOXX Banks Index, five institutions from Spain, Portugal, Italy and one from Germany, reported shareholdings above the threshold.

Position - Banco - BPM - % - Unione

The biggest combined short position was in Banco BPM at 8.1%; with Unione Di Banche Italiane at 7.22%; Deutsche Bank at 5.02%; Banco Comercial Portugues at 2.97%; Banca de Sabadell at 1.5%; and FinecoBank Banca Fineco at 0.71%.

European Union regulations demand that any short position of at least 0.5% of a company’s stock, and movements above that level, are disclosed at the end of every day’s trade.

Policymaker - Toolkit - Slide - Recession - Markets

With little in the policymaker toolkit to prevent a slide into recession, markets have reacted negatively to corporate sectors most at risk such as banks, which could face lower loan growth, weaker returns from...
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