Mr Big Short’s firm sets sights on RBS and Lloyds
THE New York fund which counts The Big Short’s Steve Eisman as its star investor is shorting Lloyds Banking Group and the Royal Bank of Scotland, The Mail on Sunday can reveal.
Eisman caught the eye of Hollywood producers after he made a fortune predicting the collapse of the US housing market which ushered in the 2008 crash.
The fund manager, who works for US investment firm Neuberger Berman, sent shockwaves through the City in November when he mysteriously revealed he was shorting two UK banks over fears the country will leave the European Union without a deal.
Eisman, played by Steve Carell in the film, refused to name the banks.
That led to speculation he was targeting CYBG and MetroBank, which were both heavily shorted at the time according to claims which Neuberger Berman has denied.
However, Neuberger Berman’s absolute return multi- manager fund, which reports Eisman’s investments, has now disclosed short positions against Lloyds and RBS, the high street giants most exposed to the UK market.
The fund has taken out a $3.3 million (£2.6 million) bet against a host of banks, with Lloyds being one of the largest banking shorts in the fund’s portfolio.
Other banks t hat have been shorted include US giant Wells Fargo, Spain’s BBVA and Italy’s Unicredit.
The fund reports the positions of many of its fund managers, but is only shorting Lloyds and RBS in the UK.
Hedge funds borrow stock from large, institutional investors and sell it on in the hope that the value of the shares will fall, and then make a profit by buying it back at a lower price.
Eisman’s f und has pl aced a £260,000 bet against Lloyds, representing 506,900 shares, and a £228,000 wager against RBS, totalling 106,500 shares.
The Big Short was released in 2015 and warmly received, raking in t i cket sales of $ 133 million (£105 million) and winning an Oscar for Best Adapted Screenplay. Its cast of stars also included Christian Bale, Ryan Gosling, Brad Pitt and Rafe Spall as well as Carell. The name of Eisman’s character was changed to Mark Baum.
Eisman worked at FrontPoint Partners, a unit of Morgan Stanley, until 2011. He then briefly ran his own fund, Emrys Partners, before s hutting i t down and j oi ni ng Neuberger Berman in 2014 to run a fund within the firm’s Private Asset Management division.
Bank shares hit year lows after Theresa May’s Brexit deal was knocked off course by a spate of Government resignations. May later delayed the parliamentary vote as it became clear she would not secure the required majority to get the deal past MPs.
The turmoil has wiped billions off the market value of UK banks since the start of the year, despite bosses insisting they are well-prepared for a disorderly Brexit.
Other domestic stocks such as housebuilders have also been punished over Brexit fears.
RBS became the first of the ‘Big Four’ UK banks – which also number Lloyds, Barclays and HSBC – to set aside money for the risk of a rise in bad debts due to Brexit. The bank announced in October that it was making a £100 million provision for ‘economic uncertainty’.
Speaking to analysts at the end of October, Barclays’ chief executive Jes Staley said the bank was ‘being prudent about credit in the UK’ following the referendum result.