When asked what he thinks about banning short sellers, investor and "Shark Tank" star Kevin O’Leary didn’t hold back.
What Happened: With the regional banking sector seeing pressure after several collapses and bankruptcies, there are increasing calls to ban short selling on bank stocks and investors bets on which banks could fail next.
Fox Business host Larry Kudlow recently said that Congress is putting pressure on SEC Chair Gary Gensler, with some elected officials saying short sellers are taking advantage of the situation to make a quick profit.
O’Leary was asked by Kudlow what he thought of the push to ban short selling.
“That is absolutely ridiculous. Short selling is very, very important and it’s part of the market,” O’Leary said.
O’Leary said having short sellers helps reduce fees and improve the market. The investor said people are always looking for “upside down balance sheets” and stocks that are overvalued. He also added that short sellers take on more risk in their trades.
“When you’re short, you have unlimited downside. Short sellers are a lot smarter than guys who just go long.”
Throughout his conversation with Kudlow, O’Leary said the call to ban short selling or blaming short sellers is “complete poo poo.”
O’Leary said efforts have been made before to ban short selling, they went nowhere and the same can be said now.
“[Short sellers] are here to stay forever, this idea will go nowhere.”
Kudlow jokingly asked O’Leary to expand on his definition of "poo poo," which prompted the Shark Tank host to say the Fox show is one of family values, and everyone knows exactly what he means.
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Why It’s Important: O’Leary shared the video of his interview with Kudlow on Twitter and said making shorting stocks illegal is “the stupidest idea I have ever heard."
“Let the markets be the markets!” O’Leary said.
The comments from O’Leary come as JPMorgan Chase & Co JPM CEO Jamie Dimon has been vocal about banning short selling on banks.
Dimon said short sellers were partially responsible for the collapse of regional banks.
“My folks would tell me that’s not the problem … if you actually analyze stocks and short sales, it doesn’t seem that big of a deal. I think they may be partially wrong because, as you know, some people are unscrupulous, and they use other means to go short,” Dimon said.
Dimon encouraged the SEC to act on banning short selling and any illegal means used to place bearish bets on bank stocks.
“They should be punished to the full extent the law allows it.”
During the time banks were struggling, O’Leary spoke out against bailouts.
“I do not want to pay for every idiot banker’s mistakes. And there are many idiot bankers.”
O’Leary said that the incompetence of bankers isn’t his problem.
“The emotional ties attached to regional banks in the past and the purpose of their existence are no longer a reality now. Now, it’s all done online and you don’t need that building.”
O’Leary said that he would not be a buyer of bank stocks at the time.
“I’m never going to buy bank stocks. It’s over.”
Photo via Shutterstock.
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