Wow, how prescient. Articles like this are especially damning to the execs that sold stocks just a few weeks ago. This was not some huge surprise. They may not have anticipated the ferocity with which there would be a run on the bank, but they absolutely knew they were in deep shit and would need to do a capital raise. And I hope nobody tries to defend this with "those stock sales were from 10b5-1 plans!". Those can easily be gamed by execs waiting to release bad news until after their sales go through, or by cancelling sales if things look good for the future (courts have said you can't be charged with insider trading for not selling shares, which means you can basically just set up 10b5-1 plans but cancel them as needed based on your insider knowledge).
SVB Financial: Blow Up Risk (2022)
11–20 of 69 posts
Re: SVB Financial: Blow Up Risk (2022)
#12Earlier quoted context omitted.
You say that like it's some gotchya, but someone who felt the bank wasn't in a good financial position would naturally short it. This just means the guy put his money where his mouth is.
It's beneficial for someone who is shorting a stock to put out negative press about the company. It's basically the modus operandi of some hedge funds. I also don't get the gotcha though. As long as it's disclosed and the facts are true I don't see the problem.
I assume it's going to be much, much riskier to rely on sentiment affects of an article rather than valid research when shorting.
Re: SVB Financial: Blow Up Risk (2022)
#13Earlier quoted context omitted.
You say that like it's some gotchya, but someone who felt the bank wasn't in a good financial position would naturally short it. This just means the guy put his money where his mouth is.
It's beneficial for someone who is shorting a stock to put out negative press about the company. It's basically the modus operandi of some hedge funds. I also don't get the gotcha though. As long as it's disclosed and the facts are true I don't see the problem.
> It's beneficial for ...
It's beneficial for anyone has a thesis that a stock is mispriced to:
* Take a position (short or long) that will take advantage of the mispricing
* Broadly communicate this thesis after taking the position
Re: SVB Financial: Blow Up Risk (2022)
#14Wow, how prescient. Articles like this are especially damning to the execs that sold stocks just a few weeks ago. This was not some huge surprise. They may not have anticipated the ferocity with which there would be a run on the bank, but they absolutely knew they were in deep shit and would need to do a capital raise. And I hope nobody tries to defend this with "those stock sales were from 10b5-1 plans!". Those can…
Who got hurt by execs selling stock into the market? Hopefully sophisticated investors who should’ve known better. For over a year there were indicators SVB was not healthy.
“We are selling to willing buyers at the current fair market price.”
Edit: if you don’t like the 10b5-1 rules as they stand, feel free to submit a comment to Gensler and Co at the SEC. If you can’t trade on positive material non public information, why would you expect them to trade on negative MNPI? Follow the rules and what is least likely to cause you to end up in handcuffs or in front of Congress. That is a logical and rational decision.
Re: SVB Financial: Blow Up Risk (2022)
#15Wow, how prescient. Articles like this are especially damning to the execs that sold stocks just a few weeks ago. This was not some huge surprise. They may not have anticipated the ferocity with which there would be a run on the bank, but they absolutely knew they were in deep shit and would need to do a capital raise. And I hope nobody tries to defend this with "those stock sales were from 10b5-1 plans!". Those can…
> They may not have anticipated the ferocity with which there would be a run on the bank
Bank runs are pretty much always ferocious because 1) that's what a run is, rather some euphemism for the prelude like "temporary liquidity processing anomaly" and 2) they're positive feedback loops that end up ferocious as soon as someone responding to the "TLPA" gets noticed by someone else.
Re: SVB Financial: Blow Up Risk (2022)
#16Wow, how prescient. Articles like this are especially damning to the execs that sold stocks just a few weeks ago. This was not some huge surprise. They may not have anticipated the ferocity with which there would be a run on the bank, but they absolutely knew they were in deep shit and would need to do a capital raise. And I hope nobody tries to defend this with "those stock sales were from 10b5-1 plans!". Those can…
Who got hurt by execs selling stock into the market? Hopefully sophisticated investors who should’ve known better. For over a year there were indicators SVB was not healthy. “We are selling to willing buyers at the current fair market price.” Edit: if you don’t like the 10b5-1 rules as they stand, feel free to submit a comment to Gensler and Co at the SEC. If you can’t trade on positive material non public informatio…
>Hopefully sophisticated investors who should’ve known better.
You mean like your retirement fund manager?
Re: SVB Financial: Blow Up Risk (2022)
#17Really great marks. Almost perfect. Except the key piece "The company should be able to sell its AFS with minimal losses and about $2-3 billion of the portfolio pays down every quarter. The company also has some borrowing capacity. So, right now it looks unlikely the losses on the HTM portfolio will get triggered, it is a risk."
File this under... "thought it was bad, didn't know it was THIS bad." And enjoy the millions of dollars you made :P
Re: SVB Financial: Blow Up Risk (2022)
#18Earlier quoted context omitted.
Who got hurt by execs selling stock into the market? Hopefully sophisticated investors who should’ve known better. For over a year there were indicators SVB was not healthy. “We are selling to willing buyers at the current fair market price.” Edit: if you don’t like the 10b5-1 rules as they stand, feel free to submit a comment to Gensler and Co at the SEC. If you can’t trade on positive material non public informatio…
>Hopefully sophisticated investors who should’ve known better. You mean like your retirement fund manager?
“Sophisticated” doing a lot of lifting in this case. Very aspirational. If you’re buying single named securities without any due diligence, you deserve the returns you encounter. That’s your job!
No one index investing is going to feel this in a material capacity. Depositors will be made “whole enough”, and an irresponsible bank got blown out and dismantled. The system worked. If there was fraud, regardless of criminal and/or civil, prosecute those responsible.
Re: SVB Financial: Blow Up Risk (2022)
#19Wow, how prescient. Articles like this are especially damning to the execs that sold stocks just a few weeks ago. This was not some huge surprise. They may not have anticipated the ferocity with which there would be a run on the bank, but they absolutely knew they were in deep shit and would need to do a capital raise. And I hope nobody tries to defend this with "those stock sales were from 10b5-1 plans!". Those can…
We don't need to assume the execs knew their held to maturity MBS scheme would blow up when they are selling weeks before announcing a loss (which they would definitely be acutely aware of).
Re: SVB Financial: Blow Up Risk (2022)
#20Wow, how prescient. Articles like this are especially damning to the execs that sold stocks just a few weeks ago. This was not some huge surprise. They may not have anticipated the ferocity with which there would be a run on the bank, but they absolutely knew they were in deep shit and would need to do a capital raise. And I hope nobody tries to defend this with "those stock sales were from 10b5-1 plans!". Those can…
Who got hurt by execs selling stock into the market? Hopefully sophisticated investors who should’ve known better. For over a year there were indicators SVB was not healthy. “We are selling to willing buyers at the current fair market price.” Edit: if you don’t like the 10b5-1 rules as they stand, feel free to submit a comment to Gensler and Co at the SEC. If you can’t trade on positive material non public informatio…
“Even though we have insider knowledge that indicates it’s worth less than market and quite possibly nothing at all.”