Opinions
Jim Cramer - Mad Money
SVB Financial Group
SIVB-O
BUY
Feb 08, 2023
Stock price when the opinion was issued
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He thinks that technology is disrupting the market and this company is a regional bank in Silicon Valley. It has been banking early stage tech companies for about 15 years and has a very loyal customer base. The book value has grown by 13% per year for several years. Deposits continue to grow and it is the fastest growing regional bank in the US. Yield 0%. (Analysts’ price target is $277.63 )
He recommended it in February 2023, right before SVB collapsed and triggered the regional bank meltdown. He takes full responsibility for that call, even though most analysts recommended the stock. How did we call get it wrong? SVB once ran a fantastic business, financing a lot of tech start-ups, then expanded into R&D banking. They were on a roll as their deposits mushroomed and their EPS soared. But then in 2022, the Fed's aggressive interest rates hikes led to the IPO market shutting down and existing clients couldn't raise more cash. He assumed these effects were baked into the fallen share price. If the Fed had stopped cutting rates (as the market wrongly assumed) in early 2023, SVB could have survived. However, SVB didn't reveal how concentrated their deposit base was or how aggressively they'd invested in government bonds. They were reckless.
The 9th-biggest gainer this year so far. It recently bought a research firm and become less dependent on private capital. Coming back hard this year after a brutal 2022 falling 66%. Those fears were not justified. Stock is still cheap.