JPMorgan Analysts Saw SVB’s Liquidity Problems Last Fall And STILL Pushed The Stock

Echoes Of The Tech Bubble

We may be thinking of the wrong bubble comparing the banking crises of today with 2007-2008. The better analogy may be the 2001 tech bubble.

How else to explain JPMorgan analysts identifying Silicon Valley Bank’s liquidity problems last November and still hyping the stock?

JPM released its now-troubling research after holding a “deep dive webinar with SVB CFO Dan Beck,” the report said.

“Should the balance of deposit outflows and inflows persist for longer than expected, another key topic we discussed … is the risk that SVB will need to sell underwater [Held To Maturity] securities and realize losses,” the report said.

“The focus of investors rapidly shifted to the company’s $16 billion unrealized losses in its HTM securities portfolio with investors expressing that should deposit outflows persist for longer than expected, the company may need to sell underwater HTM securities to meet cash needs.”

Still, JPM’s analysts were largely optimistic about the California-based bank and even gave it an “overweight rating” — meaning the stock’s value would increase.

JPMorgan analysts did a deeper dive than I did last night, saw all the same red flags and then some, and still recommended the stock.

Reality Check: SVB's Collapse Was A Full Year In The Making

All of SVB’s depositors and VC customers had access to the bank's SEC filings and the JPMorgan research and still shrugged off the obvious problems.

Those old enough to remember the 2001 tech stock bubble might recognize the duplicity and mendacity the “research”, as well as the casual disregard for business and investment fundamentals by the rest of Wall Street.

There's a lot to criticize about the Fed's interest rate hikes, but SVB's collapse of completely a self-inflicted wound.