The Dow Jones U.S. Travel & Leisure Index surged 8.2%
Short sellers betting against European and U.S. travel, leisure and bank stocks lost billions of dollars on Monday, after news of a COVID-19 vaccine triggered a rally in shares of companies that have suffered under months of virus-fuelled restrictions and lockdowns.
Investors positioned to profit from declines in European travel, leisure and bank stocks alone lost more than $500 million on Monday, according to data provider ORTEX Analytics.
Among U.S. shares, just seven travel-linked companies, Carnival Corp, Expedia Group, Booking Holdings Inc, Royal Caribbean Group, American Airlines Group Wynn Resorts and Norwegian Cruise Line Holdings, accounted for $2.35 billion in losses for short sellers, the firm’s data showed.
Total short-selling losses across industries are likely to have been much higher.
European travel and leisure stocks are up 12% since the start of the month while shares of banks, which are sensitive to the state of the economy and among the market’s worst performers since the coronavirus outbreak in March, reached a five-month high on Tuesday.
The Dow Jones U.S. Travel & Leisure Index jumped 8.2% on Monday and is up nearly 15% for November. On Tuesday, the index fell 1.7%.
This week’s dramatic rebound in beaten-up share prices followed Pfizer’s announcement of positive data from its vaccine trial, raising hopes of an economic recovery.
Calculations by ORTEX Analytics showed short sellers of European travel and leisure companies lost $284 million based on positions held on Monday. Losses for European bank short-sellers totalled $233 million.
Rolls-Royce, Carnival and British Airways owner IAG rank were among the biggest winners of this week’s rally, while bank stock risers include Societe Generale , Barclays and Lloyds, all up between 10% and 25%.
But for short sellers the rebound equalled pain after several months of profitable bets — they lost an estimated $101 million on Deutsche Lufthansa on Monday, $52 million on TUI and $66 million on HSBC, ORTEX data showed.
Whilst Pfizer described yesterday as a great day for science and for humanity, it was anything but for short sellers who look to have been caught out by the market adjustment, said ORTEX co-founder Peter Hillerberg.