“In fact, I think the best cyclical game in the long run is the very big banks,” said Eisman, senior portfolio manager at Neuberger Berman, at CNBC “Fast Money”.
“After the Great Financial Crisis of 2008, the regulatory apparatus spent years working on the banks … the banks were forced to deleverage and have multiple additional liquidities,” said Eisman. “Now that we have a second crisis, the banks are doing well. “
Eisman is one of the Big Shorts, a group of investors who experienced short-term sales of subprime mortgages during the 2008 financial crisis.
Bank stocks have taken an even bigger hit than the wider market this year as world governments push to keep people at home to stem the coronavirus epidemic. These measures weighed on consumer spending and dampened the global economic outlook.
As of Thursday’s close, JPMorgan Chase and Bank of America were down more than 30% from the start of the year, while Citigroup and Wells Fargo each lost more than 46% of their market value. The S&P 500, meanwhile, was down 17.6% since the start of the year.
Eisman did not specify which US banks it was long for. He also said that “some” European banks would make good short positions with Canadian banks.
“Canadian banks, I think, have not had a credit cycle for 30 years. They are not prepared for it and they are going to have real problems, “he said, without specifying which banks he was betting against.
Eisman added that it was short Trex, a Virginia-based company that manufactures decks and outdoor items.
“A significant percentage of their customers buy their products by taking out loans,” noted Eisman. “I think it will be much more difficult for these customers to take out loans to buy something that will cost between $ 15,000 and $ 20,000. “
Trex stocks fell more than 6% in thin trading after hours.
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