Pimco co-founder Bill Gross says he's bought regional bank stocks

By Steve Gelsi

Bond king Bill Gross said Friday he's bought stock in four beaten-down regional banks as well as an exchange traded fund made up of banks, after a rough few weeks for the sector in the wake of the collapse of Silicon Valley Bank.

Gross is not currently in a legal position to recommend stocks since he's no longer a fund manager officially, but he wrote in his latest Wall Street Playbill that he's had a "long-term wish to own a bank."

Now he he's become "a banker by proxy' through ownership of regional bank stocks, which he said offered him an attractive entry point.

Gross said he's bought stock in Western Alliance Bancorp. (WAL), Synovus Financial Corp. (SNV), PacWest Bancorp (PACW) and the SPDR S&P Regional Banking ETF (KRE).

These and other regional bank stocks have been volatile with double-digit losses this year, as investors fretted over potential runs on deposits and the below-par value of their securities portfolios.

Despite his past criticism of banks for causing the Global Financial Crisis in 2008, Gross said he's always wanted to start a bank because "it's a license to make money even when run conservatively."

Stocks in many regionals are down 30% to 40% since early March, making it possible to own a lender at 60%-70% of book value, he said.

"Admittedly, regionals will have their cyclical problems if and when a recession occurs but my long-time wish to own a bank is now possible via public markets," Gross said. "Recent return on investments of 9%-10% at 60% of book provide an enticing long-term investment. Many smaller regionals may be gobbled up by larger counterparts at premium-to-market bids."

Shares of Western Alliance Bancorp. (WAL) are down 31.4% so far in 2023, while Synovus Financial Corp. (SNV) is off by 17.3%, PacWest Bancorp (PACW) has lost 51.3% and the SPDR S&P Regional Banking ETF (KRE) is down 27.1%. The S&P 500 is up 7.5% year-to-date, by contrast.

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-Steve Gelsi

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04-24-23 0758ET

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