The SEC released Credit Suisse’s 6-K filing where the bank warns investors of potential losses due to naked short covering, more on that below.
The bank recently called out AMC Entertainment predicting shares to fall to $0.95 despite the bank’s shares trading below the movie theatre chain company.
Now Credit Suisse is hiring 20 banks for a $4 billion injection in effort to pivot from Q3’s disaster.
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Credit Suisse Naked Short Covering
In this 6-K filing, Credit Suisse warns investors of potential losses due to the high possibility of naked short covering.
In a statement, the bank says, “Conversely, to the extent that we have sold assets that we do not own, or have net short positions, in any of those markets, an upturn in those markets could expose us to potentially significant losses as we attempt to cover our net short positions by acquiring assets in a rising market.“
“Market fluctuations, downturns and volatility can adversely affect the fair value of our positions and our results of operations. Adverse market or economic conditions or trends have caused, and in the future may cause, a significant decline in our net revenues and profitability.”
The closing of naked shorts would send affected securities soaring as buying momentum compounds.
Heavily shorted stocks may squeeze in the process, but the results would be disastrous to short sellers.
I’m curious to know your thoughts.
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