JPMorgan warned in November that Silicon Valley Bank’s “$16 billion unrealized losses” could pose a serious risk, according to an analyst report reviewed by The Post on Sunday.
SVB — which collapsed Friday — was the subject of a Nov. 15 report issued by the JPMorgan North America Equity Research Team for customers paying for the research.
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.
But insiders say that’s just part of the internal corporate kissing-up that goes on between analysts and businesses.
“Sell-side analysts always put a positive spin on things to remain in the company’s good graces,” a banking source told The Post. “But to a sophisticated Wall Street investor, that [HTM] note says it all.
“That note laid out all the risk concerns on the front page,’’ the source said.
“SVB and people covering it knew they had serious risk-management issues.”
JPMorgan declined to comment to The Post on Sunday.
To be sure, many on Wall Street were blindly optimistic about SVB’s prospects before the US bank’s fall.
CNBC analyst Jim Cramer has been under fire on social media over a clip that recently resurfaced showing the “Mad Money” host recommending viewers buy shares of SVB’s parent company, which owns the tech-driven commercial lender that collapsed.
“The ninth-best performer to date has been SVB Financial [the bank’s parent company] — don’t yawn,” Cramer told viewers during a Feb. 8 episode of “Mad Money.”
Cramer listed SVB Financial among his “biggest winners of 2023 … so far” alongside blue-chip stocks such as Meta, Tesla, Warner Bros. Discovery, and Norwegian Cruise Line.
“This company is a merchant bank with a deposit base that Wall Street has mistakenly been concerned by,” Cramer said in the clip.
[Written in collaboration with other media outlets with information from the following sources]
