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How Managers Have Responded to the SVB Regional Bank Crisis

Read Time: 3 Minutes

Here’s a roundup of how fund managers who owned banking stocks or bonds as of their latest publicly available portfolios have responded so far to the contagion caused by the epic collapse of SVB Financial Group (SiVB) on March 10, 2023.

SVB Financial Group Equity Owners

Diamond Hill Mid Cap

Of the funds Morningstar covers, Diamond Hill Mid Cap (DHPYX) held the biggest stake in the Silicon Valley Bank stock at 3.4% of assets as of February 2023. It was the portfolio’s third-largest holding, a big bet on a company that the government has now taken over. The stake is now worthless. The fund, which has long had more financials exposure than the Morningstar US Mid Cap Broad Value Index, has owned the stock since 2016.

The fund also had been a longtime owner of First Republic Bank (FRCB), another stock that was punished. On March 10, the firm noted that First Republic (a 2.3% position in the fund in February) has a different asset and liability mix than SVB’s, which was unique. Still, it and SVB drove the fund’s 4.5% loss for the year to date through March 13, which was worse than the index’s 3.3% loss, and ranked at the bottom of the mid-value Morningstar Category for the past week. On March 17, Diamond Hill disclosed that, as of the day before, all its strategies had sold their First Republic stakes.

Sound Shore

Sound Shore (SSHFX), a 35-stock value-leaning portfolio, held 2.9% in SVB Financial as of December 2022. The fund bought the stock in 2019 at a valuation the managers found attractive given its above-average growth rates and limited credit risk. It also owned 3.2% in First Republic as of year-end, having added to both it and SVB in 2022′s fourth quarter. As market conditions recently changed, the managers said they reacted quickly and reduced their exposure to bank stocks and financials in general.

The strategy has significantly lagged its large-value category peers and Morningstar US Large-Mid Cap Broad Value Index for the trailing month ended March 20 but was a little above average for the year through the same day.

Franklin Mutual Beacon

Franklin Mutual Beacon (TEBIX) and Franklin Mutual Shares (TESIX) bought SVB in late 2022, believing the bank’s focus on innovative firms provided a competitive advantage, and the managers said they found SVB’s valuation appealing, owing to the stock’s sharp decline from its late-2021 highs. According to the firm, Franklin Mutual Beacon owned a 2.8% position as of February, and Franklin Mutual Shares had a 1.7% stake.

Artisan Global

Artisan Global Discovery (APFDX), Artisan Global Opportunities (ARTRX), Artisan Mid Cap (ARTMX), and Artisan Small Cap (ARTSX) each held about 1.1% of assets in SVB as of December. The team behind these strategies has owned SVB on four separate occasions over the past 15 years. In 2022′s fourth-quarter commentary, the managers noted the headwinds SVB faced from rising interest rates but viewed concerns as short-term and expressed confidence in the company’s credit risk exposure.

On March 10, the team sold a chunk of its position in SVB before the FDIC took receivership of the bank, but the managers could not liquidate it all before trading was halted. Additionally, the team exited its position in First Republic, which was a more than 1% position in both the Mid Cap and Global Discovery portfolios.


Parnassus Value Equity (PARWX), Parnassus Mid Cap Growth (PARNX), and Parnassus Mid Cap (PARMX) owned stakes between 1.2% and 1.6% in Signature Bank (SBNY) as of February, according to the firm. Parnassus said it pared back its Signature Bank position in Parnassus Mid Cap as its price declined and had sold its full position in Parnassus Mid Cap Growth, deploying it into First Republic.

All remaining positions were marked to zero value upon the bank’s collapse. Parnassus Mid Cap owned 2.4% in First Republic Bank as of February. The firm disclosed that it sold its First Republic Bank positions in Mid Cap and Mid Cap Growth.

The managers increased Parnassus Core Equity’s (PRBLX) position in Bank of America (BAC)and upped Parnassus Value Equity’s stakes in Bank of America and Citigroup (C), as they believe the biggest banks could benefit if customers move their money.

Other Funds With SVB Exposure

Managers from several funds covered by Morningstar that had positions of at least 1% in SVB Financial Group as of their most recently disclosed portfolios would not comment, including:

  • Harding Loevner Global Equity (HLMVX) (1.9% in SVB Financial Group, plus 2.7% in First Republic)
  • Emerald Finance and Banking Innovation (HSSAX) (2.1% across SVB Financial Group, First Republic, and Signature)
  • Columbia Select Mid Cap Value (NAMAX) (1.7% in SVB Financial Group)

  • Champlain Mid Cap (CIPMX) (1.4% in SVB Financial Group)

  • AB Sustainable Global Thematic (ALTFX) (1.2% in SVB Financial Group), and

  • American Century Heritage (TWHIX) (1% in SVB Financial Group)

Cambria Value and Momentum ETF (VAMO) also had one of the largest exposures at over 6%. As a proxy, the Financial Select Sector SPDR ETF (XLF) had roughly a 0.41% weight to SVB Financial Group as of Jan. 31, 2023.

The data also shows that there is a variety of funds that held the security from large-growth, mid-cap growth, to large-value funds showing stark differences in valuation.


SVB Financial Group Debtholders

Now here’s a look at what happened from the perspective of two top-tier bond managers.

Mohit Mittal, a comanager on Silver-rated Pimco Investment Grade Credit Bond (PIGIX), thinks the events at Silicon Valley Bank and Signature Bank do not pose a systemic risk to the financial sector. Emphasizing the distinction between top-tier banks, larger regional banks with diversified deposit bases, and smaller regional banks like Silicon Valley Bank, Mittal observes that more than 80% of Pimco funds’ financials overweights are concentrated in the top-tier category.

The managers’ preference for the financial sector stems from their confidence in the regulatory oversight of the top-tier banks and the trends of deleveraging balancing sheets and derisking that they see across banking businesses.

Similarly, Greg Peters of Silver-rated PGIM Total Return Bond (PTRQX) and Silver-rated PGIM Global Total Return (PGTQX) and his team have kept a financials overweight for some time, but they have avoided smaller regional banks in favor of the senior debt of large financial-center banks.

Since Silicon Valley Bank’s collapse, the team has been taking advantage of market volatility to add to the positions in senior debt from the six largest U.S. money-center banks, which they think will benefit as depositors migrate away from smaller banks that lack strict government oversight.

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