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Credit Suisse Messed Up Badly, But There's Still Value


  • Credit Suisse messed up badly, waiting after the major U.S. banks to unload Archegos Capital stock.
  • The company's $4.7 billion in losses wipe out more than 18 months in earnings, and the company has the potential to see additional losses.
  • Credit Suisse, post paying off this loss, has the potential to have a single-digit P/E ratio if things balance out.
  • I do much more than just articles at The Energy Forum: Members get access to model portfolios, regular updates, a chat room, and more. Learn More »
Credit Suisse Cuts Executives And Bonuses After Archegos Collapse
Photo by Dan Kitwood/Getty Images News via Getty Images

At the start of March, most in the investment world had never heard of Archegos, a family office from a tiger cub, Bill Hwang. Then, the $10s of billions of assets the firm had caused a margin call and collapse rocketing through the financial world. Major banks

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This article was written by

The Value Portfolio profile picture

The Value Portfolio specializes in building retirement portfolios and utilizes a fact-based research strategy to identify investments. This includes extensive readings of 10Ks, analyst commentary, market reports, and investor presentations. He invests real money in the stocks he recommends.

He is the leader of the investing group The Retirement Forum with features including: model portfolios, macro overviews, in-depth company analysis and retirement planning information. Learn more.

Analyst’s Disclosure: I am/we are long CS. I wrote this article myself, and it expresses my own opinions. I am not receiving compensation for it (other than from Seeking Alpha). I have no business relationship with any company whose stock is mentioned in this article.

Seeking Alpha's Disclosure: Past performance is no guarantee of future results. No recommendation or advice is being given as to whether any investment is suitable for a particular investor. Any views or opinions expressed above may not reflect those of Seeking Alpha as a whole. Seeking Alpha is not a licensed securities dealer, broker or US investment adviser or investment bank. Our analysts are third party authors that include both professional investors and individual investors who may not be licensed or certified by any institute or regulatory body.

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Comments (28)

Value Digger profile picture
Today's news. Credit Suisse Raises $2 Billion as CEO Cuts Hedge Fund Unit:


Credit Suisse, which has exited about 97% of its exposure to Archegos, expects a related 600 million-franc ($654 million) loss in the second quarter, taking the total hit from the collapse to about $5.5 billion.
Investment Pancake profile picture
I agree that there is value in CS: buy put options on the stock.
No reason to buy this one.
This article is not aging well as Credit Suisse unloads more positions of Discovery, Viacom and IQ. The worst part is no one knows if they have anymore!!
@ndbbm true about unknows. As about article aging, i wonder about your expectation? is it +10% is 2 weeks :) I am long a bit, going to give it 3-6 month to decide.
CS is the most successful IB as per Dealogic in Q1.
They should keep this but improve their risk behavior. There's too much good which is in danger to be damaged. So a good investment if they don't damage their franchise.
I think it is a good long term investment. You don't get many to own stock of many companies, whose stock price is half of it's book value. Like paying 50 cents to buy a dollar.
@Osvaldas31 if you believe in book value.
I agree, don't listen buy.
Elephinooo profile picture
Nice article. A single digit P/E for a firm like this is attractive. There will be ups and downs in any business. In my mind it is safer that an infinite P/E internet gambling company, an electric car maker or tulips.
RJMC profile picture
Better investments elsewhere
Weighing Machine profile picture
This company has never created shareholder value. It should be liquidated immediately with the proceeds returned to shareholders
YourHuckleberry profile picture
Forget about ratios and comparable valuations when poor decision making is the root problem. No mathematical equation, ratio or comparable can effectively take that into account.
Wow, what a beaten up piece of crap!
Can I buy it yet?
Greensill is (and has not been) the only worm infecting weak oversight banks and money institutions. Other bigger worms loom out there, that we can count on for sure. These other Greensills will show how far this sort of behavior was carried out across the globe the past 2-3 years. Financial industry oversight has been non-existent the past 4 years across much of the globe, so hang on, as we all are going to find out just how far it went.

Outside of that, you all need to read @Fred Piard simple one sentence posted below. There is never a reason, and has never been a reason for nigh o 12 years now, to deal with CS in any fashion other than to give it and its people a wide, very, very wide, berth.

CS and DB (Deutsche Bank) are two of the worst fin'l entities an investor anywhere in the world could place their investing monies with. Both with just absolutely horrid management cultures, a culture that attracts some of the sketchiest, questionable talent around, a culture also in the BOD that only cares solely about their compensation packages and nothing else, and a culture who all out disregards (bordering on you being a nuisance) retail investors/shareholders concerns.

Go and invest elsewhere.

The best of fortune to us all
07 Apr. 2021
People are easy to forget..I believe after several months...the stock price will go up at no reason..say..back to 14$..then it is 30% gain....be patient..
Greensill may turn out to be much worse than Archegos. Credit Suisse is attempting to assign the losses to their customers, but if it could be proven they were involved in fraud, or grossly negligent, they could be sued for tens of billions.
Fred Piard profile picture
CS has a long history of messing up badly with risk management, and also little respect for their retail bank clients and ETN shareholders.
4Logos profile picture
@Fred Piard Hi Fred - really respect your work and opinion, and will revisit my decision on joining your service at the right time (long story)

do you have anything at the ready you can share to support your view of this firm and their management?
Don't buy...stay away...value trap...European banks in general are bad investments....
Every since the heyday of CSFB's M&A franchise, this has been a lower ranked IB amongst its US competitors. That's why their client base - including HF's - is 2nd tier and they tend to lurch from crisis to crisis. They have a wonderful European and Asian HNW franchise but they tend to destroy those profits with their desire to have a bulge bracket IB. Better from a shareholder point of view to rein in those ambitions and stick to their very profitable private clients knitting
J Q Ames profile picture
@Sound Investor This is 100% accurate. Spot on.
lshiang profile picture
$CS vs. $MS = Loser vs. Cheater
07 Apr. 2021
@lshiang and cheater wins...all the time.
@lshiang - It's not cheating - investment banking is completely ruthless, and there are no rules. If it's legal, and you make money or avoid huge losses, the stock market will laud you.
Jim Getten profile picture
It's all about connections, timing, and good management, isn't it? Oh, and probably risk tolerance.
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