Hedge funds managers and other large investors believe it is far too soon to call an all-clear on turmoil in the global financial sector
even after more than a week of financial lifelines, central bank assurances and a massive banking rescue deal.
Some breathed a sigh of relief that a competitor stepped in with a rescue offer for Credit Suisse. Others worried that the $3.2 billion UBS will pay is far less than the $9.5 billion Credit Suisse was valued at on Friday, and one investor said the market may not consider this to be a positive. First Republic’s stock price tumbled 33% on Friday, one day after a handful of the country’s largest banks, including JPMorgan Chase, organized a $30 billion rescue package that was supported by the Federal Reserve and U.S. Treasury.
Several fund managers said it felt dangerous to bet on further declines in light of the rescue package, noting that retail investors could band together and support banks like First Republic that were seen as solid enterprises. “This name could easily go meme stock, so there is a fear of being short here,” one manager said.
Investor Ricky Sandler, who runs hedge fund Eminence Capital LP, speculated on Twitter on Friday that an investment bank might be interested in First Republic, which caters to wealthy clients.
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