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Investor here (trying to buy into SVB), but I don't currently own anything, nor do I have any current accounts with SVB. Everything I can see about them is com

Investor here (trying to buy into SVB), but I don't currently own anything, nor do I have any current accounts with SVB. Everything I can see about them is completely overblown. Short and sweet version of research so far: - They had sold their bond portfolio for 1.8B loss (originally 21B, this is 8.5% loss) - They decided to raise money to match that loss (news release on 3/8/23) - Headlines are confusing people with "can't sell" referring to the 3/8 attempt at capital raise, but now people think SVB is trying to sell - Their Total Equity is around 13B (last balance sheet) -- that means if they completely dissolved and paid off all debts they would still have 13B on the balance sheet. Market Cap EOD 3/9 was 6.5B -- half of their actual asset value - If they go into cash insolvency and get bought out, they will likely have to sell those illiquid assets at a discount (let's estimate a 40% discount) - it's still worth 6.8B. Y'all SVB has been through this before, both in .COM and and '08. Also, to be clear -- I do not own any stock (but I want to)

deleted 4y ago
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KerryJones 4y ago
Well, I was wrong: https://www.fdic.gov/news/press-releases/2023/pr23016.html https://www.fdic.gov/news/press-releases/2023/pr23016.html
- user_named 4y ago
  Yes but you were very confident in everything you said that was wrong, so I guess that's all that matters
  - KerryJones 4y ago
    I think I only said one wrong thing -- that they would last through this. The rest is factual (still is), I'm not positive that having bought a chunk wouldn't have a positive result (see other comment)
- cityofdelusion 4y ago
  You dodged a bullet. Definitely find out what assumptions you made that were wrong, that could be a very costly mistake in the future. Betting against market headwinds that are blowing strong is always very risky, even when you are correct since sheer momentum can kill an investment.
  - KerryJones 4y ago
    I was looking at buying in with 1/60th or less of my portfolio (I'm a focused investor, most of my investments are 1/10th of my portfolio) so it would have been a small bet, I was acknowledging this as risky. I'm still not confident I was 100% wrong -- in my scenario I labeled above included the fact they could go under (I didn't think they would go under), but now that their assets being are being sold, it will depend on how deep of a discount FDIC sells for. If it's in 40%, there's a good chance that investors will still get money back (I believe). If it's 80%, they won't get it all back.
    - bjacokes 4y ago
      You're mistaking assets and equity. A 40% discount in asset value absolutely would wipe out shareholders. To be a bit blunt, given your thesis here I would advise against trading in individual stocks, at least in the banking sector.
      - KerryJones 4y ago
        In general I agree that banking sector is definitely not strongly in my circle of competence, but on my only long-term bank I'm in I've made 100+% ROI within a couple of years. That could certainly be luck. To give advise on what I should do investing seems a bit premature with no more information -- even on banking stocks. I did make a mistake in previous comment and used the word assets instead of Total Equity. The same principle applies -- FDIC will sell their assets, likely at a discount. Depending on the discount of those assets will determine how much total equity they have. Currently, their assets over liabilities is large, so there would have to be significant underselling of assets. My original thesis made it clear I was talking about 40% discount on their equity, I didn't make it clear in the subsequent thread. I.e. if bought at the last price ($40) their assets priced them in some range between $150-220/share (if they were sold off). So they would have to have a significant discount to their assets in the last 2 months since they reported to lose that much. In my book and using Graham's term, I was valuing this as a cigar-butt company.
cragfar 4y ago
> - Their Total Equity is around 13B (last balance sheet) -- that means if they completely dissolved and paid off all debts they would still have 13B on the balance sheet. Market Cap EOD 3/9 was 6.5B -- half of their actual asset value They haven't written down all their bonds yet or seen what they could actually get for them. They only sold the AFS ones, they still have $117 billion in other securities.
- KerryJones 4y ago
  Yep -- so if they lost 8% on their other bets, that was still accounted for in my valuation. Even if they lost up to 40% in their other bets (as other comments show).

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KerryJones 4y ago

Well, I was wrong: https://www.fdic.gov/news/press-releases/2023/pr23016.html https://www.fdic.gov/news/press-releases/2023/pr23016.html

user_named 4y ago
Yes but you were very confident in everything you said that was wrong, so I guess that's all that matters
- KerryJones 4y ago
  I think I only said one wrong thing -- that they would last through this. The rest is factual (still is), I'm not positive that having bought a chunk wouldn't have a positive result (see other comment)
cityofdelusion 4y ago
You dodged a bullet. Definitely find out what assumptions you made that were wrong, that could be a very costly mistake in the future. Betting against market headwinds that are blowing strong is always very risky, even when you are correct since sheer momentum can kill an investment.
- KerryJones 4y ago
  I was looking at buying in with 1/60th or less of my portfolio (I'm a focused investor, most of my investments are 1/10th of my portfolio) so it would have been a small bet, I was acknowledging this as risky. I'm still not confident I was 100% wrong -- in my scenario I labeled above included the fact they could go under (I didn't think they would go under), but now that their assets being are being sold, it will depend on how deep of a discount FDIC sells for. If it's in 40%, there's a good chance that investors will still get money back (I believe). If it's 80%, they won't get it all back.
  - bjacokes 4y ago
    You're mistaking assets and equity. A 40% discount in asset value absolutely would wipe out shareholders. To be a bit blunt, given your thesis here I would advise against trading in individual stocks, at least in the banking sector.
    - KerryJones 4y ago
      In general I agree that banking sector is definitely not strongly in my circle of competence, but on my only long-term bank I'm in I've made 100+% ROI within a couple of years. That could certainly be luck. To give advise on what I should do investing seems a bit premature with no more information -- even on banking stocks. I did make a mistake in previous comment and used the word assets instead of Total Equity. The same principle applies -- FDIC will sell their assets, likely at a discount. Depending on the discount of those assets will determine how much total equity they have. Currently, their assets over liabilities is large, so there would have to be significant underselling of assets. My original thesis made it clear I was talking about 40% discount on their equity, I didn't make it clear in the subsequent thread. I.e. if bought at the last price ($40) their assets priced them in some range between $150-220/share (if they were sold off). So they would have to have a significant discount to their assets in the last 2 months since they reported to lose that much. In my book and using Graham's term, I was valuing this as a cigar-butt company.

cragfar 4y ago

> - Their Total Equity is around 13B (last balance sheet) -- that means if they completely dissolved and paid off all debts they would still have 13B on the balance sheet. Market Cap EOD 3/9 was 6.5B -- half of their actual asset value They haven't written down all their bonds yet or seen what they could actually get for them. They only sold the AFS ones, they still have $117 billion in other securities.

KerryJones 4y ago
Yep -- so if they lost 8% on their other bets, that was still accounted for in my valuation. Even if they lost up to 40% in their other bets (as other comments show).