Everyone knows that it’s looking ugly for financials these days. Bank of America (right), for one, is down 51.54% YTD and even mighty Goldman Sachs is down 36.07% YTD.So why would a senior analyst on Espirito Santo’s banking research team want to start a hedge fund investing in them?
Meet Joseph Dickerson, a graduate of the American University in Paris who has worked at Citadel, Execution Noble, Peloton Partners and more.
Here’s what he said to Financial News to explain his seemingly strange move:
“I’m setting up a hedge fund focused on global financials. It will invest across the capital structure of financials companies. Regulation and deleveraging will change the composition of banks’ capital structures and require them to raise more equity. This will present arbitrage opportunities.”
So he’s going to take advantage of differences between market prices in the next few years as banks restructure and get used to more regulation.
That’s not all. Despite the fact that short-selling financials is banned in Greece, Belgium, France, Italy and Spain (there are easy ways to get around bans), Dickerson thinks there will be opportunities elsewhere around the world.
As for the long side, he like credit card companies and exchanges (where over-the-counter derivatives would be moved).