Wednesday, June 12, 2024

Hedge funds make $100m betting against First Republic Bank

Photo by Mariia Shalabaieva on Unsplash

Hedge funds made paper gains of more than $100m betting against slumping First Republic Bank on Friday.

The San Francisco bank’s decline, despite a bailout organised by 30 larger peers, signalled a new phase of volatility after recent chaos in the markets.

Short-sellers have racked up big gains on First Republic’s decline on Friday morning, according to research firm Ortex.

Shorts aside, more numbers have emerged telling the story of a tough week for many hedge fund strategies after the demise of Silicon Valley Bank.

Trend-followers suffered historic losses on Monday and Tuesday after big moves in bond markets capsized positions build on the ‘inflation trade’ that rates would keep rising to stem inflation.

Macro funds have also lost out, with Bloomberg reporting on Brevan Howard traders being grounded after loss limits were hit and the closure of Adam Levinson’s Graticule Asia macro after YTD losses deepened this week.