NEW YORK ( TheStreet) -- Short interest on financial stocks rose 9% in the second half of May, the largest increase since early March 2009, when financial short interest rose 24.6%, according to research published Wednesday by Keefe, Bruyette & Woods.
The surge, encompassing the period from May 15 through May 31, was driven by a big rise in short interest on "universal" U.S. banks Bank of America (BAC - Get Report), Citigroup (C - Get Report), Goldman Sachs (GS - Get Report), Morgan Stanley (MS - Get Report), and JPMorgan Chase (JPM - Get Report) which together saw a 61% upswing in short interest.
Particularly notable was a 75% rise in Bank of America short interest and a 61% surge in Citigroup short interest, KBW's analysts observed. During that same time frame, Bank of America saw its share price rise 0.7% while Citigroup shares fell 4.6%. The S&P 500, meanwhile, fell 1.5% during that same stretch.
Short sellers borrow shares in the hope the stock will fall. They can then buy it back at a lower price and pocket the difference. The New York Stock Exchange releases short interest data twice a month with a roughly two week lag time.-- Written by Dan Freed in New York. Follow this writer on Twitter.