Funds News

Seabreeze's Kass: US financial stocks 'priced to perfection'

NEW YORK, May 7 (Reuters) - Hedge-fund manager Doug Kass said he is selectively shorting U.S. financial stocks, which have more than doubled since bottoming in early March, on the belief that they have been “priced to perfection” ahead of the stress test results late Thursday.

“From my perch, investors should sober up and reduce their holdings in financials now,” Kass said in a note to clients. “Financial stocks are now priced to perfection.”

The KBW Bank Index .BKX of 24 large lenders, including 14 that are subject to the stress tests, rose 25.8 percent in the first three days of this week, and had more than doubled since bottoming on March 6.

In an interview with Reuters, Kass later said: “I am legging in to some shorts -- selectively.” Kass is founder and president of Seabreeze Partners Management.

Reporting by Jennifer Ablan and Jonathan Stempel; Editing by Chizu Nomiyama