Opinions
Jim Cramer - Mad Money
SVB Financial Group
SIVB-O
COMMENT
Mar 13, 2024
N/A
Stock price when the opinion was issued
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TOP PICK
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 )
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TOP PICK
Really likes financials. This is a grower, rather than just a cost-cutter. Loan growth of about 8%, whereas others were flat. Funds a lot of Silicon Valley. Success also building its wealth management business. Now working on an investment bank. Technically performing well. Tied to a growing part of the US economy in a growing part of the US. Likely to have outsized returns. No dividend. (Analysts’ price target is $699.43)
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PAST TOP PICK
(A Top Pick Sep 23/21, Down 46%) It is a regional bank in the business of banking technology companies i.e. providing loans or funding them. It often gets warrants as part of the fees for these loans. However these early stage, unprofitable tech companies have rolled over and the prices are still coming down. He got out with a stop loss.
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.