Current Affairs Stocks and shares and stuff
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To put some defence, it's in the big banks interests to prevent contagian being spread. You could argue thats true for the VC's, but I suppose it's less immediate, and there are counter points such as ensuring you get your money out.
From an investment standpoint though, if these banks survive, they are selling very cheply currently. You will probably get FRC for under 1 year's FCF. It's an astonishingly good deal.
summerisle
The rain, it raineth every day
Shocked I tells ya, shocked.
Personally think the VCs have behaved very poorly, both for their own interests and ofhers. They themselves set some of the seeds for the failure - they could and should have helped their fledgling companies set up proper risk management of the cash they shoveled their way so they were better covered by FDIC insurance. Or, once realizing the bank that had been their valued partner for years had got over its skis, they could have contributed to the capital raise that was attempted and tried to quell the panic. Instead they instigated a bank run on SVB and those that didn’t manage to get out in time tried to trigger ones at other small banks so they could get bailed out themselves.
I know the valuations of the remaining regionals look attractive but I guess what will hold some investors back is the number of unknowns still outstanding.
The report on Fed supervision of SVB is likely to be very critical that they didn’t spot/address a) the large interest rate bet b) its vulnerability to a bank run. So I’d expect the supervisors to be extremely diligent in the next few weeks on seeing which other banks have the same triggers and asking for increased funding which will dilute current stockholders. At the very least these banks are likely going to have to raise their interest rates to retain existing depositors hitting their profitability, There could also be new rules proposed, like the medium size banks going back to having to do stress tests, although given the GOP have the House I doubt that will get too far. Focus is also likely to fall on the loan books in addition to the securities portfolios and how high rates and COVID changes in WFH have impacted those.
On the plus side the Fed clearly would prefer the regionals to continue in some fashion as it isn’t keen on the “too big to fail“ banks getting even bigger - seeing Wells Fargo rake in deposits in the flight after all their transgressions must have been particularly galling. So the regional bank ETF (KRE) might be an in interesting way at some point to get exposure without having to make a single bet on one individual bank.
Don’t know - was hoping someone else did! Hopefully there will some journos like Matt Levine writing explainers for tomorrow!
I'll have a read around it and see what I can decipher.
If I understand correctly they are essentially convertible bonds so bit surprising they are getting wiped out whereas stockholders at least get something.
I havent have too much time to look at it, but looks like they were written down to zero value as part of the takeover. Interesting equity holders vote more back than bondholders, not always the way.
Anyone experience with junior stocks and share isa?
The little one has been very generously gifted money when born so we want to put the money to use on top of adding to it each year ourselves to give her a good pot to start adulthood with.
Have read many guides but it's good to hear peoples direct experiences.
The little one has been very generously gifted money when born so we want to put the money to use on top of adding to it each year ourselves to give her a good pot to start adulthood with.
Have read many guides but it's good to hear peoples direct experiences.
He better act fast
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