(Repeats to additional subscribers)
* Marshall Wace, Discovery Capital cut "short positions"
* Signals confidence Deutsche share price has stabilised
* Market data shows overall short positions have fallen
* Graphic on Deutsche's problems: tmsnrt.rs/2dcqb49
By Maiya Keidan and Svea Herbst-Bayliss
LONDON/NEW YORK Oct 6 Two leading hedge funds
which made big bets on Deutsche Bank shares falling
are now reducing their "short" positions, in a sign of
confidence in the stability of the lender.
Germany's biggest bank has been in turmoil since
mid-September when it said U.S. authorities were demanding up to
$14 billion to settle claims that it missold U.S.
mortgage-backed securities before the financial crisis.
Hedge funds can take bets against companies - known as short
positions - by borrowing the stock in the hope it will lose
value and they can repay the loan for less, pocketing the
Marshall Wace, a $25 billion hedge fund co-founded by
British financier Paul Marshall and U.S. billionaire Robert
Citrone's Discovery Capital Management had been among the funds
with the biggest short Deutsche positions, dating from before
the crisis erupted three weeks ago.
However official filings by the funds to German authorities
show both have been unwinding their short positions over the
past week, indicating that they believe the bank's share price
has bottomed-out. The stock dropped to a record low on Sept. 30
but has since rebounded slightly.
London-based Marshall Wace and Connecticut-based Discovery
Capital both declined to comment on the reasons for their
Data indicates the reductions could reflect a wider trend in
the "short interest" market, which is dominated by hedge funds.
The total amount of short positions in Deutsche dropped to
5.34 percent of the bank's stock on Wednesday, having peaked at
6.39 percent a day earlier following a rapid rise from below 2
percent in mid-September, according to data from Markit.
Marshall Wace, which had borrowed 1.03 percent of Deutsche's
total share capital, began to unwind its short on Sept. 29,
reducing its position to 0.94, the filings show. It has since
cut it further, to 0.88 percent.
Discovery Capital Management, which had 0.61 percent, cut
its bet to 0.51 percent on Sept. 30 and has since gone down to
European law requires short investors to declare their
positions if they borrow more than 0.5 percent of a company's
shares. This makes it possible to chart their activity.
It is not clear if the transactions of Marshall Wace and
Discovery Capital represent a wider hedge fund trend, given the
Markit data offers only a snapshot, and some other big funds
have not reduced their short positions in Deutsche.
Highfields Capital Management retains the 0.74 percent
position it had before September, while fellow U.S. fund AQR
Capital Management took a 0.5 percent position on Sept. 28 and
still has it, filings show.
Both funds declined to comment.
(Additional reporting by Jonathan Gould and Arno Schuetze in
Frankfurt, and Alasdair Pal in London; Editing by Pravin Char)