First Republic: Relatively Safe Bank, Firewall Around It And Extremely Cheap

Mar. 20, 2023 12:49 PM ETFirst Republic Bank (FRCB) StockCS, FRCB172 Comments
Jose Solorio
1.55K Followers

Summary

  • Regulators are unlikely to let another bank fail, and also they are unlikely to seize a bank based on contagion fears of a systemwide collapse.
  • Investors should sell options to make directional bets, as implied volatility is extremely high.
  • A buyout is an extremely high probability, so avoid shorting at all costs.
  • First Republic Bank is an exemplary model for the banking industry. Its conservative approach to lending and its superb customer service are exemplary for the rest of the industry.
  • Unrealized losses are an everyday phenomenon for the banking industry and no reason to panic.

Financial Markets Continue Volatile Week As Problems At Banks Spook Investors

Spencer Platt/Getty Images News

Investors have turned into full panic mode when it comes to shares of regional banks without taking time to analyze the incoming data and make rational decisions. As with any crisis, there are opportunities being created left

This article was written by

1.55K Followers
I have been on the markets since 2006. I concentrate mostly on medium-term option trades. Among my big wins were betting against the oil spike in 2008, buying Green Mountain Coffee at $17, First solar at $14, and betting against Exxon Mobile before its collapse. My biggest failures have been investing in Fremont in 2008 and Synergy Pharmaceuticals in 2018 (both companies ended bankrupt.) Diversification is your biggest key to success in the markets. Even great losses won't make you loss your capital for reinvestment.

Analyst’s Disclosure:I/we have a beneficial long position in the shares of FRC either through stock ownership, options, or other derivatives. 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.

Investing in distressed companies carries significant risk and higher than average reward. A complete loss of capital is entirely possible.

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