The surprising losers in the First Republic Bank rout

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Do you want to guess the mutual fund (company) that lost the most in the First Republic Bank rout? I mean the mutual fund that held the most $FRC before it’s being closed by FDIC and since taken over by the JP Morgan Chase. I was a bit surprised to find that the Vanguard Group, held about 11.45% of $FRC shares (source: Yahoo Finance). And yes $FRC was in the S&P 500 index too (it was replaced by another company on May the 4th). It seems auto pilot, aka indexing is not always safe here.

At the same time, yesterday evening I learned a local hedge fund company Wedgewood Partners, invested in $FRC stock too (not a lot, also note their positions varies over the time). One ironic part is in their recent letter to clients, they put a bank run old movie photo (it’s a wonderful life) there, it’s no longer fun when you think about the stock were worth zero now. The Chief Investment Office CIO of Wedgewood, seems like a Warren Buffett admirer too (just like yours truly). Note Warren basically just said $FRC did some garbage mortgage deals a week ago. So blindly following Warren Buffett or blindly take reverse Berkshire position won’t work. We need to do our own research.

Also, last night (05-15-2023) I read this: ‘Big Short’ investor Burry bet on regional banks in first quarter… Burry’s Scion Asset Management’s positions included 150,000 shares in $FRC, 250,000 shares in $PacW, 850,000 shares in $NYCB, and 125,000 shares of $WAL , filings showed.

(Update 05-16-2023) David Einhorn’s Greenlight Capital snapped up 2 regional banking stocks during last quarter’s turmoil. It seems $NYCB and $FCNCA are the beneficiaries of the crisis so far. At one time I traded $NYCB too but I did not make money (in fact I lost a bit I think).

Last but not least, I found a website that have information on hedge funds and other institutional investors 13F/13D and holdings: e.g., Pzena and Wedgewood parnters.

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