David Fuller and Eoin Treacy's Comment of the Day
Category - General

    Ackman Says Regional Bank Stocks an 'Incredible Bargain' Now

    This article from Bloomberg may be of interest to subscribers. Here is a section: 

    Pershing Square Capital Management’s Bill Ackman said that regional bank stocks are an “incredible bargain” right now as long as the government does the “right thing.”

    The trade is not without real risk but offers “very attractive asymmetry,” he said in a tweet, adding that a decline in rates makes this an even better investment. 

    The turmoil that has hit bank stocks deepened on Monday with regional banks hit the hardest as the KBW Regional Banking Index sank as much as 12%. That is the sharpest intraday drop since March 2020. 

    Read entire article

    Schwab Tumbles Most Ever as Firm Seeks to Calm Investors

    This article from Bloomberg may be of interest to subscribers. Here is a section: 

    Charles Schwab Corp. tumbled the most ever on an intraday-basis as the online brokerage sought to reassure investors that it has sufficient liquidity to handle any volatility following the collapse of Silicon Valley Bank.

    Shares of Westlake, Texas-based Schwab dropped as much as 23% to $45 after trading was halted for volatility. The stock later pared its decline and was down 17% to $48.93 at 10:09 a.m.
    in New York.

    The firm has a broad base of customers and capital in excess of regulatory requirements, founder and Co-Chairman Charles Schwab and Chief Executive Officer Walt Bettinger said in a statement on its website Monday.

    “Schwab’s long-standing reputation as a safe port in a storm remains intact, driven by record-setting business performance, a conservative balance sheet, a strong liquidity position, and a diversified base of 34 million-plus account-holders who invest with Schwab every day,” the executives wrote.

    The company, with roughly $7.4 trillion of client assets, said it has access to about $100 billion of cash flow, more than $300 billion of incremental capacity with the Federal Home Loan Bank and other short-term facilities, and that more than 80% of deposits at its bank are insured by the Federal Deposit
    Insurance Corp.
     

    Read entire article

    Takes Aim at Illumina Over Grail Deal

    This article from Barron’s may be of interest to subscribers. Here is a section: 

    Illumina was valued at more than $70 billion in the summer of 2021, when it said it had closed the deal for Grail, compared with around $31 billion now. It is still fighting a decision by European regulators to block its acquisition of Grail and potentially force it to divest the company. Illumnina currently holds Grail as a separate unit.  

    Shares in Illumina were up 20% on Monday but have fallen about 25% over the past 12 months. As well as the uncertainty over the Grail acquisition, the company is facing a projected slowdown in sales of its gene-sequencing products. 

    Read entire article

    SVB in Talks to Sell Itself After Capital Raise Fails, CNBC Says

    This article may be of interest. Here is a section: 

    SVB Financial Group is in talks to sell itself after attempts to raise capital amid a bank run failed, CNBC reported.

    Large financial institutions are looking at a potential purchase of the company, CNBC said Friday.

    SVB — which for months has been adamant that it wouldn’t significantly restructure its balance sheet — stunned investors Wednesday when it said it would issue $2.25 billion of shares and booked a $1.8 billion loss on the sale of a large part of its available-for-sale securities.

    The Santa Clara, California-based company took steps this week to shore up capital after being hit by losses on its securities portfolio and a slowdown in funding at the venture capital-backed firms it serves.

    The stock, which tumbled 60% on Thursday, plunged as much as 69% early Friday in New York before trading was halted. The company’s bonds posted record declines, igniting a broad selloff in bank shares around the world.

    Read entire article

    GS Tactical Flow-of-Funds

    Thanks to a subscriber for this note from Goldman Sachs which may be of interest. Here is a section: 

    1. OpEx - March (3/17) Option Expiry: $2.8 Trillion Notional to un-clench GAMMA (also quarter-end gamma). This is a big number. This removes the 4k pinner, that has kept a lid on big moves. Either way. We are going to move next week.

    2. Peak open corporate repurchase window. The corporate buyback blackout window begins on 3/16, where 40% of US corporates will be in the blackout window. This window ends of 4/28. Reminder corporate authorizations have been an all-time high YTD. There will be a decline in vwap purchases during the closed window. We expect executions to drop by ~30% during the closed window.

    Read entire article

    Email of the day on basic military equipment

    Your focus on some military defence companies is timely. What do you think are the best "spades and shovels" type defence companies (not high techs like Raytheon) but ones that makes bullets, shells, camouflage, personal military equipment? Have we missed Rheinmetall?

    Can you pls keep them under review in the video thereafter as I sometimes don't have time to read the front page and prefer video. Thanks and keep up the good work.

    Read entire article

    Eoin's personal portfolio: stock market index short initiated February 7th 2023

    SVB Plunges Most Since 1998 on Stock Offering, Securities Sales

    This article from Bloomberg may be of interest. Here is a section: 

    The firm said it had sold about $21 billion of securities from its portfolio with a plan to reinvest the proceeds, which will result in an after-tax loss of $1.8 billion for the first quarter. SVB also announced offerings for $1.25 billion of its common stock and $500 million of securities that represent convertible preferred shares. Additionally, General Atlantic committed to purchase $500 million of common stock, taking the total amount being raised to about $2.25 billion.

    The offering is expected to price Thursday after the market closes and trade on Friday, according to a person familiar with the matter.

    “The improved cash liquidity, profitability and financial flexibility resulting from the actions we announced today will bolster our financial position and our ability to support clients through sustained market pressures,” the company said in a letter to stakeholders. 

    Read entire article