First Citizens Acquires Much of Failed Silicon Valley Bank; John Maxfield on Investing in Banks in a Post-SIVB World; Quitters; Twitter valued at $20 billion and source code leaked; The only Fed hike the market likes to see

1) The stocks of regional banks have taken a beating in the past month amid the implosions of Silicon Valley Bank ("SVB") and Signature Bank...

At its lows last week, the SPDR S&P Regional Banking Fund (KRE) hit $41.28, down 34% in a month and 43% from its 52-week high.

The sector is bouncing today, however, thanks to this news, which sent First Citizens BancShares (FCNCA) up nearly 50% this morning: First Citizens Acquires Much of Failed Silicon Valley Bank. Excerpt:

First Citizens BancShares, one of the nation's largest regional banks, is buying large pieces of Silicon Valley Bank more than two weeks after the lender's collapse sent tremors through the banking system.

The Federal Deposit Insurance Corp. said First Citizens is acquiring all of Silicon Valley Bank's deposits, loans and branches, which will open Monday morning under the new ownership.

The purchase includes $56.5 billion in deposits and about $72 billion of SVB's loans at a discount of $16.5 billion. Some $90 billion of SVB's securities will remain in receivership.

2) I like to buy great companies whose stocks are down because they're in out-of-favor sectors (KRE this morning traded at $44.45), so I'm doing research on regional banks for the next issue of Empire Investment Report. (Click here to find out how to become a subscriber and receive the next issue the moment it's released, plus access to all back issues.)

In the meantime, I suggest listening to this interview on Yet Another Value Podcast: "John Maxfield on Investing in Banks in a Post-SIVB World" (you can listen on Apple podcasts here and Spotify here). Excerpt:

John Maxfield, Editor of the Maxfield on Banks Newsletter on Substack, has spent nearly two decades studying America's best and worst banks, the history of banking, and interviewing bank leaders. John joins the Yet Another Value Podcast today to answer your burning questions regarding investing banks, his mindset during this "crisis" and how to think about investing in banks moving forward.

For more information and to subscribe to John's new substack, please visit: https://maxfieldonbanks.substack.com

Show notes:

Introduction + Episode sponsor

John Maxfield's background and how he got into investing in banks

Overall thoughts investing in banks right now in a post-SIVB, UBS buying Credit Suisse world

Blood in the streets in banks vs. other markets

Why are customers with $10-100M running uninsured deposits in First Republic?

Regional banks

How should folks be weighing the risks with regard to investing in banks?

Catalysts that caused the 1873 crisis; what can we learn from that crisis

The "everyone needs to chill" model when thinking about run on the banks

Bank metrics – how KPIs investors care about have changed/evolved

Franchise risk for banks

Does what is happening now have an impact on the community banks?

Bank stocks that look interesting to John Maxfield in a Post-SIVB world

How do you make $ as a bank investor buying a bank for 4x book value?

Generalist interest in banks: what should folks put more weight on when evaluating various investing opportunities (HINT: how did they perform during the 2008 financial crisis)

How important is speaking with management from bank stocks?

Closing thoughts

3) In his latest missive, Quitters, NYU marketing professor Scott Galloway calls out Tesla (TSLA) CEO Elon Musk and his fellow "quitters," "survivalists," and "cowards":

There's a lot wrong with America, and we have reason to be upset about it.

The question is: What do we do about it? For too many, the answer is quit: Instead of fixing the Fed, start a different currency. Instead of healing our divides, split the nation in two. Instead of making this planet more habitable, colonize other planets or put a headset on that takes you to a meta (better) universe. But here's the thing: We're stuck here, and with each other.

Reformers

History's greatest leaders aren't quitters, but reformers. Abraham Lincoln felt it was his "duty to preserve the Union," not to accept its division and cauterize the wound. Despite the headlines, and all the work to be done, our nation's arc still bends toward bringing groups together. From Civil Rights to gay marriage, America still strives to bring people closer under the auspices of a shared belief in a union that offers liberty and the pursuit of happiness.

We have lost sight of our achievements. The U.S. is responsible for more than half of the world's Nobel science laureates and has provided more than a trillion dollars in non-military foreign aid. Inflation is high, but not as high as our developed peers, and our economy continues to grow. We can and will be the first society in history to be a truly multicultural democracy. It comes down to this: Do we invest in Mars or Michigan? Are our most fortunate business and elected leaders citizens or survivalists?

When I was in elementary school, we performed Duck and Cover drills to prepare for a nuclear attack by the Russians. A flash of light from the detonation of a thermonuclear device? No problem, just duck and cover, and you'll be fine.

Spoiler alert: No matter how many rough-cut gems you can shove up your ass or how plush your bunker, there is no escaping the fallout of our democracies failing. Because our democracies are largely capitalist and accept, if not idolize, people who aggregate the wealth of small nations. If sh*t gets real – I mean real – bunkers will likely become easy targets in the recalibration of society.

The previous sentence is a pedantic way of saying the best bet (by far) is to double down on a society that already has Netflix, Nespresso, and Girl Scouts. Citizenship is not just an obligation; it's also a trade. In the case of America, the best trade is to invest in each other and what MLK called our "beloved community." We need reformers, not quitters.

Villagers

The 2003 M. Night Shyamalan film The Village is about a group of people who secede and develop an alliance with creatures who keep villagers in line by terrorizing them.

Spoiler alert: The creatures are just villagers in costume. The threat is still real, but it's exaggerated in order to serve powerful people's objectives. In the U.S., our threats are also real, but powerful people are dressing them up to suit their own nihilism and self-interest. These anti-citizens do not see dead people (a much better film), but tear at the fabric of what is, and continues to be, the great experiment that is the U.S. They should be called out for what they are: cowards.

4) Speaking of Musk, here are two stories in the headlines today about his disastrous acquisition of Twitter:

From the Wall Street Journal: Elon Musk Offers Employees Stock Grants Valuing Twitter at About $20 Billion. Excerpt:

Elon Musk said Twitter Inc. employees will receive stock awards based on a roughly $20 billion valuation, less than half of the $44 billion price he acquired the company for last year, according to an e-mail viewed by the Wall Street Journal.

Mr. Musk in the note to staff said he was optimistic about the social-media company's future. "I see a clear, but difficult, path to a >$250B valuation," meaning stock granted now would be worth 10 times more, he said.

Mr. Musk also said in the e-mail that Twitter is being reshaped so rapidly that the company "can be thought of as an inverse startup." He said radical changes have been necessary in part to ensure that Twitter didn't go bankrupt, according to the e-mail, which was reported earlier by Platformer and The Information.

The new valuation figure is a sign of the challenges that have faced Twitter since Mr. Musk's takeover. Many big advertisers stopped spending on the platform, challenging Twitter's main source of revenue, though the company has been working to woo advertisers back.

And from the New York Times: Twitter Says Parts of Its Source Code Were Leaked Online. Excerpt:

Parts of Twitter's source code, the underlying computer code on which the social network runs, were leaked online, according to a legal filing, a rare and major exposure of intellectual property as the company struggles to reduce technical issues and reverse its business fortunes under Elon Musk.

Twitter moved on Friday to have the leaked code taken down by sending a copyright infringement notice to GitHub, an online collaboration platform for software developers where the code was posted, according to the filing. GitHub complied and took down the code that day. It was unclear how long the leaked code had been online, but it appeared to have been public for at least several months.

5) This cracked me up (that's tennis legend Roger Federer, of course, whose nickname is Fed):

The only Fed hike the market likes to see:

Best regards,

Whitney

P.S. I've been telling you for the past week about an exclusive interview coming up... and tomorrow is the day.

Bookmark EmpireBackdoor.com and be sure to show up tomorrow at exactly 1 p.m. Eastern time to find out how one asset class – which you've been locked out of for 82 years – could be the key to big gains ahead.

P.P.S. I welcome your feedback at WTDfeedback@empirefinancialresearch.com.