Lansdowne Partners has loaded its bearish guns against the Bank of Ireland (NYSE:IRE)—the $12.4 billion hedge fund revealed a 0.57 percent short in the Irish lender. The Lansdowne short may not be huge but the message is significant. Recently Goldman Sachs downgraded IRE to Sell from Neutral rating. In response to the downgrade shares dropped 5 percent in intraday trading. To Lansdowne's credit, IRE shares are now down 12 percent since the fund disclosed the short on May 31—this hedge fund does have some kind of charm.
Lansdowne Short, Wilbur Ross Long In Bank Of Ireland:
Bank of Ireland happens to be Wilbur Ross's best bets as he likes to call it. He helped privatize the bank along with other famous investors. WL Ross & Co. owns a 9 percent stake in the Bank of Ireland. Prem Watsa's Fairfax Financial Holdings (TSE:FFH), Wilbur Ross, Fidelity Investments and The Capital Group were given a below 35 percent stake overall in the Bank of Ireland (NYSE:IRE) through a rights offering.
Goldman Sachs' reason for downgrading Bank of Ireland (NYSE:IRE) was that its shares have outrun their course of growth and have very limited upside potential. The analysts also cited operational headwinds as one of the factors that hinder growth in IRE and said that further share price movement will be controlled by news related to restructuring of distressed consumer debts. Further decline in IRE shares came the next day when Fitch Ratings' released the statement, saying that the banks need to raise more capital to avoid loan impairments, a prospect that looks bleak. IRE fell 7.6 percent in trading.
Hedge Funds Bet Against Other European Banks
Other European banks have also been targets of bearish calls. TT International has a short position in Banco Santander, S.A. (NYSE:SAN). Other Spanish banks like Banco de Sabadell SA (MCE:SAB) have been targeted by Marshall Wace and Discovery Capital, whereas Bankinter SA (OTCMKTS:BKNIY) (MCE:BKT) is also a popular short among hedge funds. Italian banks also pop up frequently in short position disclosures, Banca Monte dei Paschi di Siena SpA (BIT:BMPS), Banco Popolare Societa Cooperativa (BIT:BP) and Banca Popolare di Milano (BIT:PMI) have been targeted by short sellers.