Volatility breeds fear. Nothing becomes easier than to blame circumstances on the one thing you can't see or understand. Hence people have convinced themselves that those rumours were started by those seeking to make a quick killing by a quick fall. Who are we to let the truth get in the way of a good story?
Except that even hacks have commented that this blame game takes us back 10 years or more. The authorities are so worried about their reputation that they would send 100 people to investigate the opening of an envelope at present. Reasons are emerging to begin to question whether the press were spun in the wrong direction.
Short interest, as measured by properly covered stock borrows, is low in HBOS. About 6% mcol last Tues evening, then has hovered around that level. The FTSE average is around 4.5%.
Institutional investors didn't believe the rumour and took the price weakness as an opp to buy more shares - to the tune of 5% in fact.
Then on Monday, news emerged of Mike Ashley's large long spread bet in HBOS. Michael Owen scored for the Magpies and his Chairman bet big on the Halifax? Strange times.
In Australia certain companies have fallen rapidily in price for two reasons. Firstly firms like ABC Learning Centres issued a profits warning. But secondly, it is often public knowledge that their CEO's have borrowed cash from banks using their share options at collateral.
Could it just be that the HBOS fiasco was a tale of so called "predatory trading" as opposed to a bear raid?
Finally, one wonders what other spin would have been made should HBOS have moved as aggresively as say LEH or Bear Stearns or Soc Gen over recent weeks. A 17% fall was not remarkable in the recent context.
