No deal Brexit: Big Short investor Eisman betting against UK stocks

Reuters/Paramount Pictures

• “The Big Short” investor Steve Eisman, played by Steve
  Carell in the movie, says he is betting against two UK banks in
  the lead up to Brexit.
• 
  If Labour’s “Trotskyite” leader Jeremy Corbyn
  comes to power, Eisman said he could short as many as 50 UK
  stocks
  
• Eisman said he expects that while the UK will
  secure a deal with Brussels, that deal will be rejected
  in the UK parliament, ultimately forcing Britain out of the
  bloc without a deal.
• Eisman is famous for betting against the US housing
  market ahead of the 2008 subprime-mortgage crisis.

The hedge-fund manager famous for betting against the US
housing market ahead of the 2008 crash is shorting a pair of
British bank stocks in anticipation that the UK falls out of the
European Union without securing a Brexit deal.

“I’m shorting two stocks in the UK,” he told a conference
in Dubai over the weekend,
as reported by Bloomberg. He wouldn’t name the
companies. 

He reportedly told the conference that while he expects the
UK to secure a deal with Brussels, he then expects that deal to
be rejected in the UK parliament, ultimately forcing Britain out
of the bloc without a deal.

Bloomberg notes that Metro Bank, and CYBG, the parent
company of Clydesdale Bank and Yorkshire Bank, are the two most
shorted UK financial stocks.

Some 6.6% of Metro Bank’s stock is currently being shorted,
data
from Castellain Capital’s Short Interest Tracker showed on Monday
morning.

Eisman said that while he is currently shorting just two UK
stocks, that number could rise as high as 50 if Labour Party
leader Jeremy Corbyn were to become prime minister, because he
believes Corbyn’s policies would be detrimental to the UK
economy.

“I’ve got a screen of about 50, and I might short all 50 if
I think Jeremy Corbyn is going to be prime minister,” he
said. 

“Corbyn’s a Trotskyite. Now I know my Trotskyites well and
I know you don’t want to be invested in the UK if a Trotskyite is
prime minister,” he added.

Eisman was the main character in “The Big Short,” the nonfiction
book by Michael Lewis about the 2008 subprime-mortgage bubble in
the US. Steve Carell played Eisman in the 2015 film adaptation.

Since gaining notoriety beyond the financial sphere after
the book’s publication, Eisman has been a vocal market
commentator, and in the last couple of years in particular has

warned frequently about the health of European banks,
particularly those in Italy, and Germany’s biggest lender
Deutsche Bank.

“Deutsche Bank is a problem bank,” he
said in an interview in May.

A short seller makes money by borrowing a company’s shares
and selling them, with the aim of buying them back at a lower
price and returning them, pocketing the difference.

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