Shares of Fifth Third Bancorp have attracted heavy short interest recently as some investors bet that the high-priced stock is going to fall.

Some analysts say the short interest may represent a sign that some investors think bank stock prices have peaked or are faltering.

Banks have recently fallen behind the pace of the stock market on worries about the profit impact of falling interest rates.

Others view the short interest activity as the work of arbitragers after an acquisition deal by the Cincinnati bank.

Short interest is essentially a wager that a stock's price will fall. it represents shares borrowed on the hunch that the loan can later be repaid at a lower price.

From mid-July to Aug. 13, short interest in Fifth Third's stock totaled 839,850 shares, the National Association of Securities Dealers reported this week.

The short interest represented 22 times Fifth Third's average daily share volume, the 18th-highest multiple among over-the-counter stocks in the month and the highest among Nasdaq-traded banks.

The 22 multiple was a large jump from 12 in July.

Holding Steady

Fifth Third's share price was steady in the period covered by the survey. On Aug. 13, it closed at $54, down from $54.50 on July 15. Late Wednesday, the shares were trading at $52.875.

Short playing is risky because losses can quickly mount if a stock rises rather than falls. In that case, short players must buy the stock as quickly as possible to cover their positions. The coverage ratio reveals that risk.

The total short interest position in Fifth Third has grown 9% since mid-June, when it totaled 7 7 1, 000 shares.

"I'm not too surprised," said Joseph A Stieven of Stifel Nicolaus & Co., St. Louis. "Some people think it is time in the market cycle to get bearish on the banks, and Fifth Third is at the very high end of the valuation scale."

Fifth Third Lynnshares trade at 16.5 times estimated earnings this year. It is the only major bank stock whose valuation matches the price-to-earnings ratio for the Standard & Poor's 500 stock index.

Mr. Stieven said he did not think the short interest was a statement about riskiness at Fifth Third itself

"They have a tremendous long-term earnings record, and it would be hard to make a case for betting against them," he said.

Short interest generally has been setting records in the over-the-counter market. It rose 5.2% in August to 587.4 million shares, the seventh straight month in which a new high has been set.

'August Doldrums' Blamed

P. Michael Brumm, chief financial officer at Fifth Third, said Wednesday the short interest was small in contrast to the Ohio bank's 60 million shares outstanding. He blamed the jump in the coverage ratio to lower trading volume during the "August doldrums."

He also noted that Fifth Third's pending acquisition of Tristate Bancorp, a Cincinnati thrift, probably has invited speculation by arbitragers, since the all-stock deal has a fixed exchange ratio.

In such a situation, arbitragers play the market in both stocks, usually by selling shares of the acquiring institution and buying those of the seller.

Thomas D. McCandless, an analyst at PaineWebber Inc., agreed that Fifth Third's acquisition is a possible reason for short interest activity.

"The arbitragers may see it as a way of locking in a risk-free rate of return," he said.

Unusual Timing

But he noted that this kind of activity in stocks usually o curs much closer to the time a closes.

Mr. Brumm said the acquisition, announced on July 2, is not likely to close until December. Fifth Third will pay about $68 million in stock for the thrift.

Mr. McCandless also said the short activity may reflect "speculation from people who are specialists at taking a bearish posture" on banks and on stocks in general.

But the analyst said he was not concerned about the outlook for Fifth Third.

"The company remains a premier growth company of the banking industry and deserving of its premium valuation," he said.

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