Latest: European Banks in Freefall on SocGen Rumor

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(List compiled by Becca Lipman)

Societe Generale, France's second largest bank, has the rumor mill spinning with speculation. 

SocGen has been having a spot of financial trouble lately: The stock has plummeted 31.56% since August 1st and Moody's Investor Service is placing the company under review for a possible downgrade.

According to Moody's, the downgrade review has to do with the company's exposure to Greece's public and private debts, a possible Greek default, and speculation on France's debt rating. 

And now SocGen is rumored to make an announcement this afternoon. Some speculate their financials aren't strong, and that they could be going the Bear-Sterns route. 
 
"SocGen categorically denies all the market rumors," the bank spokeswoman said. (via Reuters)

Although such speculation is only founded by rumors, some may refer to the old adage, "where there's smoke, there's fire." 

Trading on rumors is not recommended, but if you are interested in trading the idea of a French downgrade and an apocalyptic financial meltdown across Europe, we can help.

Below we have listed the European financial institutions experiencing increasing short selling.

Because short selling requires borrowing, an individual or institution must meet several requirements (including background checks) to engage in short selling. Thus, in general, short sellers are more sophisticated than the average investor.

Short selling reflects a prediction that prices are going to fall, a relatively small short float indicates that fewer short sellers think that company has bad short-term prospects.

Short sellers are targeting these European finical institutions, do you think they're onto something? 

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1. Allied World Assurance Company Holdings Ltd. (AWH): Property & Casualty Insurance Industry. Market cap of $2.0B. Current price at $51.81. Shares shorted in the most recent month at 1.50M vs. the previous month at 1.30M. This represents a 0.54% change in the 37.10M share float. The stock has gained 5.61% over the last year.

2. Willis Group Holdings Public Limited Company (WSH): Insurance Brokers Industry. Market cap of $6.16B. Current price at $35.13. Shares shorted in the most recent month at 2.10M vs. the previous month at 1.84M. This represents a 0.15% change in the 168.63M share float. The stock is currently stuck in a downtrend, trading -10.58% below its SMA20, -12.66% below its SMA50, and -6.16% below its SMA200. It's been a rough couple of days for the stock, losing 10.19% over the last week.

3. Deutsche Bank AG (DB): Foreign Money Center Banks Industry. Market cap of $43.78B. Current price at $41.67. Shares shorted in the most recent month at 5.42M vs. the previous month at 4.64M. This represents a 0.09% change in the 906.25M share float. This is a risky stock that is significantly more volatile than the overall market (beta = 2.2). The stock is currently stuck in a downtrend, trading -19.83% below its SMA20, -24.78% below its SMA50, and -26.43% below its SMA200. It's been a rough couple of days for the stock, losing 9.87% over the last week.

4. Credit Suisse Group (CS): Foreign Money Center Banks Industry. Market cap of $35.92B. Current price at $28.96. Shares shorted in the most recent month at 2.55M vs. the previous month at 1.82M. This represents a 0.07% change in the 1.04B share float. The stock is currently stuck in a downtrend, trading -17.12% below its SMA20, -23.61% below its SMA50, and -28.81% below its SMA200. It's been a rough couple of days for the stock, losing 10.97% over the last week.

5. Allied Irish Banks plc (AIB): Foreign Money Center Banks Industry. Market cap of $601.10M. Current price at $0.89. Shares shorted in the most recent month at 1.67M vs. the previous month at 908.71K. This represents a 0.06% change in the 1.22B share float. This is a risky stock that is significantly more volatile than the overall market (beta = 2.87). The stock is currently stuck in a downtrend, trading -44.18% below its SMA20, -55.33% below its SMA50, and -74.86% below its SMA200. It's been a rough couple of days for the stock, losing 44.71% over the last week.

6. XL Group plc (XL): Property & Casualty Insurance Industry. Market cap of $5.88B. Current price at $19.22. Shares shorted in the most recent month at 14.39M vs. the previous month at 14.24M. This represents a 0.06% change in the 267.22M share float. This is a risky stock that is significantly more volatile than the overall market (beta = 2.56). The stock is currently stuck in a downtrend, trading -7.63% below its SMA20, -9.98% below its SMA50, and -13.04% below its SMA200. The stock has gained 7.4% over the last year.

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The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of The NASDAQ OMX Group, Inc.



This article appears in: Investing , Investing Ideas , Stocks

Referenced Stocks: AIB , AWH , CS , DB , WSH , XL

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