TD Bank short sellers are betting on these headwinds

April 6, 2023

Toronto-Dominion Bank (TSE: TD) is keeping flat this morning a day after it became the most-shorted bank in the world.

Pro shares his view on TD Bank news

Short sellers have accumulated positions worth well over $3.0 billion in TD Bank as Invezz reported HERE.

According to Daneshvar Rohinton of Industrial Alliance, investors are betting against the financial services behemoth as it’s facing headwinds in all three of its divisions.

First is the dominant Canadian franchise. Second is Charles Schwab. And the last is U.S. regional banking. So, if you want to express your anxieties, TD Bank would be a great conduit for those three distinct but overlapping reasons.

The Canadian multinational has about a $10 billion stake in Charles Schwab that’s been under pressure since the start of the recent banking crisis. TD Bank shares are down more than 15% versus their year-to-date high at writing.

What else is contributing to the short interest?

Rohinton also agreed that short sellers are targeting Toronto-Dominion as it’s in the middle of buying First Horizon Bank to further expand its exposure to U.S. regionals.

Nonetheless, the recent bank failures, he added, may see TD Bank renegotiating or even pulling out of that deal altogether. Speaking with BNN Bloomberg, he said:

I think it requires a little bit of courage and some tough negotiating, but I think there’s a good chance that the deal will probably not go through in its current form, and I’d welcome it.

Wall Street currently has a consensus “overweight” rating on the bank stock.   

The post TD Bank short sellers are betting on these headwinds appeared first on Invezz.