Bradesco’s Stock Surge Faces Skeptical Betting Frenzy

Banco Bradesco finds itself at the center of a dramatic market contradiction. Even as the Brazilian financial institution secures the distinguished "Bank of the Year" award for 2025, a significant and growing segment of the investment community is placing heavy bets against its shares. With the stock already up roughly 91% this year, a surge in short selling activity raises a pivotal question: is this rally poised for a correction, or could it trigger a painful short squeeze?

An examination of major investment funds reveals a stark disagreement over Bradesco's future path, highlighting the current tension.

• The Bulls: Demonstrating strong conviction, Fisher Asset Management aggressively increased its stake by approximately 18.4%, bringing its total holding to over 88 million shares. Wellington Management Group also reinforced its long-term confidence by acquiring an additional 12.8 million shares.
• The Bears: In contrast, the quantitative research firm Arrowstreet Capital moved to reduce its exposure. Its latest portfolio adjustment involved the sale of roughly 595,391 shares.

This split suggests that fundamental, value-oriented investors are backing a sustained recovery narrative, while quantitatively-driven funds may be locking in profits following the equity's powerful advance.

Should investors sell immediately? Or is it worth buying Banco Bradesco?

Short Sellers Target the High-Flying Stock

The most striking signal of skepticism is the explosive growth in bearish positions. Since the last reporting period, short interest in Banco Bradesco has skyrocketed by 87.23%. Traders are currently shorting approximately 46.31 million shares. The "days to cover" metric stands at about one day. This rapid accumulation of short positions creates a highly volatile setup, indicating a belief among some that the rally has overshot fundamentals. However, the low "days to cover" figure combined with high trading volume also sets the stage for a potential short squeeze if positive momentum continues.

Prestigious Award Underscores Operational Progress

Countering the pessimistic market bets is a fundamental vote of confidence from industry observers. The Banker, a Financial Times publication, named Banco Bradesco the Bank of the Year 2025 for Brazil on December 3/4. This marks the seventh time the bank has received this honor. The award specifically recognizes the institution's digital transformation initiatives and its strategic execution within Latin America's competitive banking landscape. This external validation supports the argument that the year's share price appreciation is grounded in operational improvements rather than mere speculation.

High Stakes and a Critical Juncture

Trading near $3.63, Bradesco's shares are testing the upper bounds of many analyst targets following their climb from a 52-week low of $1.84. The extreme rise in short selling is a clear testament to elevated expectations and minimal room for disappointment. Forthcoming quarterly results will be crucial in determining whether the bank's operational strength can justify the current optimistic valuation, or if the skeptics will be proven right.