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Toronto's Bay Street financial district.
Toronto's Bay Street financial district.
(Tim Fraser For The Globe and Mail)

Shorting Canada’s banks is a lonely enterprise

A story about the manager of a small hedge fund going short Canada by betting against the dollar and banks has generated plenty of discussion.

What’s clear from the numbers is that the manager, Vijai Mohan, has not got a lot of company on the trade of shorting Canada’s banks.

Hedge fund sources say the short loonie trade is common among the managers of so-called “trend following” funds. (There’s about $300-billion of capital in funds running the trend following strategy.) But shorting the banks is tougher. They have big and rising dividends, and they have a lot of support from the government in the form of policy intervention and mortgage insurance.