NEW YORK (
) -- Short sellers stepped up their bets against
in the first half of June, a strategy that looks to be off to a decent start.
Shorting activity on Citigroup rose to 497 million shares in mid-June from 433 million at the end of May. Until the New York Stock Exchange released this latest data Thursday, short sellers had been backing away from their bearish bets. Short interest on Citigroup declined in both the first and second halves of May.
Short sellers borrow shares in the hope of buying them at a lower price in the future and pocketing the difference. The NYSE releases data on short interest twice per month, several days after the period in which the shorting activity took place has passed.
Citigroup shares were up 0.76% from June 1 through June 15, the period when the increased shorting increase occurred. Since that time, however, Citigroup shares have fallen 5.26%, more than rivals
Bank of America
. Those banks are all down since June 15, however, and they all saw a rise in shorting activity as well.
The bearish tone on Citigroup and big banks in general appears to be tied to overall weak economic data and the threat of tough new regulations on banks ranging from derivatives to credit cards to a proposal from the House of Representatives that would have held the banks responsible for winding down
. Even indications that the
rules may be softer than originally feared, or that the Senate shot down the House's Fannie-Freddie proposal, have done little to quell the negativity.
Still, Citigroup has gotten some good news lately, including a big investment from hedge fund wizard
, and a June 9 announcement that the U.S. Treasury had reduced its stake in the bank by 1.5 billion shares. The Treasury still owns 6.2 billion Citigroup shares.
Written by Dan Freed in New York