5 Investors Betting Big on Credit Suisse (CS) Stock

Credit Suisse (NYSE:CS) stock is trending on social media this morning. The lender, whose shares had been previously dragged down by bank stocks worries and its poor fourth-quarter results, reported today that it had found “material weakness” in its financial controls. CS stock is little changed this morning after sinking 4.5% yesterday.

As of the end of last year, the five largest investors in the bank were Renaissance Technologies, D.E. Shaw, Kopernick Global Investors, Two Sigma Investments and Shah Capital Management.

‘Material Weaknesses’ Drag Down CS Stock

Following issues raised by the Securities and Exchange Commission, Credit Suisse stated that it had identified “‘material weaknesses’ in its reporting and control procedures for the past two years,” Bloomberg reported this morning. The European bank said it would respond by altering the methods it uses to develop its reports.

Specifically, CS reported that it would implement “robust controls to ensure that all non-cash items are classified appropriately within the consolidated statement of cash flows.”

The lender maintained that the financial data which it has presented for 2021 and 2022 can be relied upon by investors to gauge its performance and overall status.

Outflows

Last quarter, Credit Suisse’s clients removed a huge $120 billion of their funds from the bank, and the financial institution reported a 2022 loss of $7.8 billion. Yesterday CS reported that its “outflows [had] stabilised to much lower levels but had not yet reversed.”

In the last two years, CS has suffered a series of missteps, as a number of firms in which the bank invested large amounts of money failed, and CS was accused of violating U.S. sanctions and “failing to prevent a Bulgarian crime ring from laundering money.”

The company’s CEO has said that it anticipates generating a profit again in 2024.

What Investors Should Watch

Investors should try to determine the extent to which the bank can reduce its client outflows and boost its profitability going forward.

On the date of publication, Larry Ramer did not hold (either directly or indirectly) any positions in the securities mentioned in this article. The opinions expressed in this article are those of the writer, subject to the InvestorPlace.com Publishing Guidelines.

Larry Ramer has conducted research and written articles on U.S. stocks for 15 years. He has been employed by The Fly and Israel’s largest business newspaper, Globes. Larry began writing columns for InvestorPlace in 2015. Among his highly successful, contrarian picks have been PLUG, XOM and solar stocks. You can reach him on Stocktwits at @larryramer.

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