As short sellers place bets against Toronto-Dominion Bank, one investment strategist said the lender has managed its risks well and Canadian banks have withstood similar short positions in the past.

According to Bloomberg News, an analysis conducted by S3 Partners showed that short sellers have increased their positions against TD Bank in recent weeks.

Philip Petursson, the chief investment strategist at IG Wealth Management, said in an interview with BNN Bloomberg Wednesday that the recent short selling doesn’t surprise him as TD has a large U.S. presence.

“I think it's a play on the TD regional bank exposure that they have. But I wouldn't put as much emphasis or fear on TD’s prospects,” Petursson said. 

“TD is excellent in terms of its risk management. And I think that they've managed their U.S. exposure very well. I think the shorts will be undone by this.” 

Despite the increase in bets against the Toronto-based lender, Petursson said Canadian banks have withstood similar instances in the past. 

“About 10 years ago, we called it the ‘great white short,’ which turned into the ‘widow-maker trade’ because everyone was shorting the Canadian banks thinking that there would be a repeat of what we saw in the U.S. That never materialized and I don't think it will,” he said. 

Indications of liquidity concerns in Canada’s banking sector are scarce, according to Bloomberg News. However, analysts have noted TD’s exposure to a potential housing slowdown in Canada coupled with its presence in U.S. markets, through a stake in Charles Schwab Corp. and its plans to purchase U.S. regional bank First Horizon Corp.