Why are short-sellers betting on TD Bank to stumble?

TD Bank’s stock have been on the rise in recent weeks as aftershocks from banking turmoil in the United States continue to ripple north of the border.Market analysts who spoke to Global News say customers of one of Canada’s biggest banks have little cause for concern, and some investors could even find opportunity in the uncertainty surrounding TD.Reuters reported early in April that TD Bank had become the most shorted bank in the world as hedge funds bet billions of dollars that the institution’s share value would fall.

As of last Wednesday — a day before TD’s annual shareholders meeting — that figure had risen to US$6.1 billion, a 45 per cent increase in just two weeks.Shorting refers to a stock market play that sees investors — oftentimes hedge funds — bet against a particular stock’s performance and profit when it goes lower, rather than higher.Investors do this by borrowing a number of shares from a firm and selling them at the purchase price, promising to pay back that borrowed stock at a future date when they hope the share value has fallen — thus netting the difference in price as profit.“Shorting, to put it simply as possible, is betting on a stock that the share price of that company is going to fall versus move higher,” explains Allan Small, senior investment adviser with iA Private Wealth.Global News reached out to TD Bank on Tuesday for comment about whether it was concerned about an uptick in bets against the bank’s stock on financial markets but did not receive a response by publishing time.Experts like Small say there are a few reasons why TD Bank might’ve been targeted by short-sellers lately — some having to do with TD in particular, and some tied to the Canadian financial system as a whole.While.