Hope You Avoided Silicon Valley Bank

Airtham was the only Analyst to have an Exit call on SIVB

Greetings! In Jan 2023 as a New Year Giveaway, we posted our full S&P500 “Do-Not-Buy” List. Usually, this list is only available to our paid customers, but considering the elevated risk for 2023 we decided to open the list for everyone, allowing a chance to every newsletter subscriber to steer clear of all companies on the list for 2023.

SIVB (SVB Financial Group) was on the list at number 117. And it seems, Airtham was the only one to have a negative outlook on SIVB. We certainly didn’t predict bankruptcy but the overall stress on the banking system due to elevated rates was becoming visible leading to a negative outlook rating for multiple banks.

What Next?

If you are holding SIVB stocks you will likely not receive any compensation, but there is still time to de-risk the rest of your portfolio. But if you are a depositor at SIVB, you certainly don’t have to worry. Based on the historical stance of regulators, the depositors and creditors are always made whole. The likely scenario is that SIVB will be acquired by one of the major banks.

The Risk

This failure does pose a significant risk that arises from how long it takes for people to access their capital. Many startups and VCs have a portion of their capital in the bank and without access to the funds some of them might face liquidity issues. Unless the issue is taken care of swiftly this can quickly spread to multiple companies and industries at which point it would become systemic.

Fed’s Trouble

This complicates matters for the Federal Reserve, as on one hand, they are still fighting stubborn inflation and need to raise rates further and on the other hand, the existing rate environment has started to create a risk to financial stability.

If Fed chooses financial stability, it will have to give up on price stability. This is a position J Powell would not want to be in. The best-case scenario is for a swift resolution of SIVB and making an emergency liquidity facility available for banks that allows them to swap HTM assets for liquidity.

De-risk

It’s clear from the collapse of SVB Financial Group that more banks could be at risk. It would be ideal to de-risk your portfolio. If you haven’t taken a look at our “Do-Not-Buy” List, then this would be a good time to check and remove all the negative outlook companies from your portfolio.

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Chevetol Resources (Registered Trademark “Airtham”) , A1009 Privilon, B/h Iscon Temple, S.G Highway, Ahmedabad, India 380054

Chevetol Resources is a SEBI-registered Research Analyst with registration number INH000011361. The firm is founded by Shail Apte, who serves as its Chief Executive Officer. Chevetol Resources focuses its research on Macro & Equities for U.S & Indian markets. The content published here is protected by copyright, and any reproduction, copying, or distribution, whether in whole or in part, is strictly prohibited without prior permission from Chevetol Resources. The information provided here is obtained from sources believed to be reliable, but we cannot guarantee its accuracy. This content is not intended to cater to your personal circumstances as we are not investment advisors and do not offer personalized investment advice. The opinions expressed by the publisher are subject to change without prior notice and may become outdated over time. There is no obligation to update any information provided here. We strongly advise that you consult a registered investment advisor and thoroughly review the prospectus or financial statements of any company or companies in question before making any investment decision. You should not solely rely on the information provided here to make any decisions. It is important to note that neither Chevetol Resources (Airtham) nor any of its employees receive any compensation for any securities or investments covered in this content.