If you glanced at the headlines for much of the past week, it might seem as if no one wanted to be invested in banks, least of all smaller, regional ones.
But every market is composed of buyers and sellers—and in the recent tumult, some investors spotted opportunities. Ken Griffin’s Citadel, for instance, amassed a 5.3% stake in Western Alliance Bancorp (ticker: WAL), whose stock was down 37% this past week.
Citadel…
If you glanced at the headlines for much of the past week, it might seem as if no one wanted to be invested in banks, least of all smaller, regional ones.
But every market is composed of buyers and sellers—and in the recent tumult, some investors spotted opportunities. Ken Griffin’s Citadel, for instance, amassed a 5.3% stake in
(ticker: WAL), whose stock was down 37% this past week.
Citadel isn’t alone in feeling bullish about buying banks. Abbott Cooper, founder of Driver Management, a longtime investor in small and regional banks, told Barron’s that some of the microcap banks in his portfolio view the drama of the past week, which included the collapse of Silicon Valley Bank and the rescue of
(FRC), as a “nonevent” for their businesses. Some of these banks have even seen deposit inflows.
Cooper, for instance, likes Oklahoma-based
(BANF), in part because only 38% of its deposits are uninsured and 30% of the shares are held by the Rainbolt family, which still runs the bank. Trading at 2.2 times book value, the stock looks a bit pricier than peers, but BancFirst’s valuation is down slightly from recent highs.
Cooper is also optimistic that the recent market upheaval may give banks a chance to get their balance sheets in order. The falling value of Treasuries because of Federal Reserve rate hikes means that many banks are sitting on hefty unrealized losses. But the recent flight to safety and anticipation that the Fed will alter course has pushed yields down and prices up.
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“My guess is that a lot of banks are taking advantage of this to remix their bond portfolios,” he says.
Write to Carleton English at carleton.english@dowjones.com
Read More: The News on Banks Has Been Bad. Some Investors See Opportunity.
