5 Investors Betting Big on Western Alliance (WAL) Stock
SVB Financial (NASDAQ:SIVB) subsidiary Silicon Valley Bank (SVB) is shining a light on the struggling banking industry. The bank’s inelegant crash is sparking a frenzy of worry touching each institution, each investor, and even thos…
SVB Financial (NASDAQ:SIVB) subsidiary Silicon Valley Bank (SVB) is shining a light on the struggling banking industry. The bank’s inelegant crash is sparking a frenzy of worry touching each institution, each investor, and even those whose exposure to the banking world is limited simply to a savings account. It’s also caused the week to start on an abysmal note for banking stocks. These stocks are being crushed under the weight of uncertainty, waiting to see how regulators will play the meltdown to limit the damage. One such player is that of Western Alliance Bancorporation (NYSE:WAL) stock.
Like most of the financial disasters leveling the investing world over the last year, the SVB collapse happened almost overnight. On Wednesday of last week, the bank announced it needed $2.25 billion to right its balance sheet. By Friday of last week, the bank ceased to exist.
California regulators have shuttered the bank’s doors, and the Federal Deposit Insurance Corporation (FDIC) is taking over the bank’s assets. Now, everybody is keeping a watchful eye on the unfolding story. Knee-jerk fear saw the end of SVB; there’s no doubt about that. Clients of the bank, which includes the likes of Andreessen Horowitz, Roku (NASDAQ:ROKU), USD Coin (USDC-USD) creator Circle, and plenty of others, began a bank run that crippled the institution. The FDIC’s careful efforts will determine whether this fear will continue to spread. To this end, it’s starting with the creation of a bridge bank, meant to help clients to continue flowing assets out of the bank’s custody.
WAL Stock Hammered by Poor Attitudes Toward Banks
While the saga unfolds — a more terrifying take on last year’s FTX meltdown — investors are not surprised to see bank stocks taking a walloping. One stock, WAL stock, is seeing a particularly bad shake.
Western Alliance Bancorporation is a bank holding company based in Arizona. The company makes for one of the country’s largest banking conglomerates. Indeed, it operates six different bank entities and more financial service companies beyond that around the Southwestern United States. One such company is Bridge Bank, a San Jose commercial bank. Western Alliance bought the bank in 2011. Bridge ties Western Alliance closely to the tech hub served also by Silicon Valley Bank.
These ties are adding to a growing fear of a banking contagion — one which has WAL stock on the ropes. While the company has said most of its deposits are insured and liquid, an outpouring of 56 million shares of WAL on the stock market is dropping prices by over 46% today.
This steep drop is certainly having a detrimental effect on holders. And some institutions who have gone big on WAL stock are paying quite a price. Among institutional holders, those with the largest WAL holding include Vanguard, Capital International Investors, Price Associates, T. Rowe Price Investment Management and Blackrock (NYSE:BLK). These five entities cumulatively hold almost 34 million shares of WAL.
On the date of publication, Brenden Rearick 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.
Brenden Rearick is a Financial News Writer for InvestorPlace’s Today’s Market team. He mainly covers digital assets and tech stocks, with a focus on crypto regulation and DeFi.
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