Billionaire investor and Pershing Square Capital Management CEO Bill Ackman has never been one to shy away from offering advice to the federal government or fellow investors.
In the wake of the collapse of Silicon Valley Bank (NASDAQ:SIVB) and Signature Bank (NYSE:SBNY), Ackman’s latest recommendations carry a sense of urgency.
What Happened: Ackman, in a long-form tweet Monday, said he believes the Federal Reserve needs to take bold action by explicitly guaranteeing all bank deposits, a move he believes will help stabilize the financial system and restore investor confidence.
“Our economy will not function effectively without our community and regional banking system,” Ackman said, calling for a swift announcement for widespread deposit guarantees, “Hours matter.”
The investor said he sees the FDIC and other regulators developing a more modern version of the existing deposit insurance regime, adding that depositor guarantees are more important in the interim.
Related Link: Why Several Bank Stocks Are Getting Rocked Today
On the trade side, Ackman said that while there is no doubt that regional bank stocks are presenting themselves at steep bargains, this investment opportunity is not without risk — but it could end up being one of the great trades of all time.
Ackman is backing out of the trade himself, citing a desire to avoid accusations of insider trading and to continue to be part of the conversation surrounding the future of the banking system. He said he’d be surprised if Berkshire Hathaway’s widely decorated CEO Warren Buffett “isn’t putting capital to work in his favorite regional banks now.”
Some of those recently beaten down regional stocks include:
Western Alliance Bancorp (NYSE:WAL)
First Republic Bank (NYSE:FRC)
Customers Bancorp (NYSE:CUBI)
PacWest Bancorp (NASDAQ:PACW)
Metropolitan Bank Holding (NYSE:MCB)
Comerica Inc (NYSE:CMA)
East West Bancorp (NASDAQ:EWBC)
Check out more bank trading ideas here.
Bill Ackman illustration by Gonzalo Lanzilotta for Benzinga.
