C Shorts Make A Comeback

According to an article on TheStreet.com, Citigroup C short interest rose in the latter half of last month. During this period, Citigroup reported a quarterly profit for the first time since Q2 of 2007. This was beyond analyst expectations. C short interest rose to 482 million shares from 416 million during the first half of April. The company has been the most actively shorted ticker on the NYSE, with C also being the stock that is always the most actively traded name on the long side. The negative sentiments around C could have been triggered by a number of factors, including an overall decline in the markets. Equities have been falling on fears related to the European debt crisis and the criminal investigation of Goldman Sachs GS. There are also concerns related to the quality and sustainability of Citigroup’s earnings. Columnist Peter Eavis of the Wall Street Journal argued that “Citigroup's expenses should ordinarily be rising if its revenue is rising. The fact that this is not happening suggests that the earnings may indeed be merely the result of marking up securities, an earnings formula that would seem to be difficult for investors to count on for long.” C has also been under pressure due to two Securities and Exchange Commission filings. According to a May 7 filing, Citigroup could lose $14.4 billion in funding if it is downgraded by Standard & Poor's, which has a "negative outlook" on the bank. According to another filing on May 7, C would pay $350,000 to Robert Joss, a former executive of Wells Fargo WFC, who is on Citigroup's board of directors, for about three weeks' work. Read more from Benzinga's Company news.