Short-seller betting on hard Brexit

A prominent American investor who made hundreds of millions of dollars by anticipating the United States financial crisis believes that the probability of a ‘‘hard’’ Brexit is now at least 50 per cent, and has plans to bet against British companies if it happens.

Steve Eisman, a portfolio manager at Neuberger Berman, a New York investment firm, added that investors could bet against ‘‘anything in the UK’’ if Jeremy Corbyn was elected prime minister after a hard Brexit, where Britain leaves the European Union without a deal.

Neuberger Berman is shorting big British retailers and banks including Marks & Spencer, clothing retailer Next, Royal Bank of Scotland, and Lloyds Banking Group.

Eisman made hundreds of millions of dollars for hedge fund Frontpoint Partners by predicting the collapse of the American housing market in 2007. He was the inspiration for Steve Carell’s character Mark Baum in the 2015 film The Big Short.

He said UK markets would rise if Prime Minister Theresa May won parliamentary approval for her Brexit deal, which is due to go before MPs for a vote next month.

He said he was short-selling three British banks in anticipation of a hard Brexit, but would cover these shorts if May’s deal was approved.

‘‘I’d walk away. I’m not wedded to it,’’ Eisman said. He declined to name the banks, but separate filings show that RBS and Lloyds are being shorted by his fund.

Short-selling involves betting that a company’s share price will fall. A shortseller borrows a company’s shares and sells them with the expectation of buying them back later at a lower price.

In the event of a hard Brexit, Eisman said he would expand his shorts to more banks and to the property sector.

‘‘The probability of a hard Brexit now is at least 50 per cent,’’ he said. ‘‘The worst situation for the UK is to have a hard Brexit, a general election and Corbyn wins. It would be perceived extremely negatively by the UK market. You could short anything in the UK at that point. It wouldn’t matter. Just throw a dart at it – short it.’’

‘‘The worst situation for the UK is to have a hard Brexit, a general election and Corbyn wins . . . You could short anything in the UK at that point.’’

Steve Eisman