Birkoa Newsletter 35 (short update re: regional banks)

Dear Birkoa LPs and prospective LPs:

This is a very short update on a piece of positive news re: the regional banks. I am currently writing my next newsletter which I expect to be distributed by end of this month.

In my newsletter #33 on May 5th, I had said that the possibility of another regional bank going under was low. That has thus far proven to be the case, as we've seen stability restored. On May 24th (newsletter #34), I provided a short update re: PacWest (one of our holdings) successfully selling off its real estate lending unit. The stock has since been rising steadily, as has been the case with other regional banks we own.

Today, there was news that it sold off some of its loans within its balance sheet to a credit fund. Link here. This will further help with its liquidity needs, and being the worst of the remaining regional banks, will help other banks within the sector as well. Thus far today, these stocks have rallied solidly despite overall market weakness. Expect this sector to keep going from strength to strength, while noting that it has overall been good for our portfolio. There's still anywhere from 40-70% more to go before my take profit order on these individual banks will be hit, so while this sector has been quite profitable, I'm holding them still.

I did luckily extend our exposure in the sector last Friday, since it was going down needlessly the entire last week I felt on Fed Chair Powell's interest rate talk. So, it's double the fun seeing this good piece of news just one trading day afterward.

I'll be in touch. 

My LinkedIn post re: this development, from today.

Sincerely,

Pranjit Kalita
CIO