No matter which way you slice it, Commonwealth Bank of Australia (ASX: CBA) shares have had a phenomenal 12-month run.
Shares in the S&P/ASX 200 Index (ASX: XJO) bank stock edged lower yesterday to close the day trading for $156.24 a share.
That's seen shares in Australia's biggest bank rise 50.6% since this time last year when they were trading for $103.70 apiece.
And it smashes the very respectable 17.6% gains posted by the ASX 200 over this same period.
And this strong run doesn't even include the $4.65 a share in fully franked dividends eligible stockholders will have received over the year.
If we add those back in, the accumulated value of CBA shares has gained a whopping 55.0%.
Again, that's well more than twice the 21.9% gains posted by the S&P/ASX 200 Gross Total Return Index (ASX: XJT), which incorporates all cash dividends reinvested on the ex-dividend date.
With these figures in mind, short selling CBA has clearly been a losing proposition of late.
But that's not dissuading Regal Partners chief stock picker Phil King, whose fund is sticking to its short position.
Are CBA shares set to fall?
King revealed his fund's short position on CBA shares to The Australian Financial Review back on 18 June.
At the time, he noted that the ASX 200 bank stock was being supported by the rising flow of passive money from index-tracking funds.
"There's a real bubble in passive investing at the moment, and as one of the largest stocks in the Aussie index, CBA is one of the biggest beneficiaries of that," King said.
However, Regal had taken a short position on the stock with an eye on increasing capital requirements in the banking sector and fierce competition. King believes this will take a bite out of future earnings for many Aussie banks.
In June, he noted:
Over the next few years, I think earnings will disappoint and soften slightly. Buy now, pay later operators are taking share in consumer lending, non-bank lenders are taking share in business lending and private credit are making inroads across the entire loan book.
Now CBA shares have gained 22% since 18 June as well as delivering a $2.50 a share final dividend payout on 27 September.
But last month, King told investors he was sticking to his short position.
According to King (quoted by the AFR):
We're very happy to be short CBA. CBA performed very well over 20 years as earnings grew strongly, but over the last 10 years or so earnings have gone nowhere, and more recently, they've started to fall.
