Bill Martin, who foresaw the collapse of Silicon Valley Bank in 2023, found his next big short in the troubled New York Community Bancorp and he’s standing by his bearish bet even after the bank raised $1 billion in new capital Wednesday. The Rocky Hill, New Jersey-based short seller from Raging Capital Ventures initiated his short against NYCB the day after its dismal earnings report on Jan. 31 drove down the stock by 38%, from $10.38 to $6.47. He opened his short position in the stock when it was trading in the range of $5.50-$6.00. The Long Island-based regional bank was then hit by more bad news and briefly traded as low as $1.70 a share on Wednesday before it said it secured $1 billion in fresh capital raise investors, including a firm led by former Treasury Secretary Steven Mnuchin. The stock ended Wednesday at $3.46. NYCB 3M mountain New York Community Bancorp Martin said he had covered part of his short bet earlier this week, when NYCB traded in the low $3 range, but added to the short after the deal announcement Wednesday afternoon, as well as Thursday morning. “I think the net result is you still end up with kind of a zombie bank. I don’t think anyone wants those rent-controlled loans,” he said in an interview Wednesday, referring to real estate loans secured by New York City buildings whose rents are regulated. “I’m very hard pressed to see a scenario where the bank comes back in a meaningful way.” NYCB on Thursday slashed its quarterly dividend for the second time in five weeks, to a nominal 1 cent per share from 5 cents, an 80% drop. The lender said it lost 7% of its deposits in the past month. Martin stood out as the “big short” during last year’s banking crisis . Using his entrepreneurial background and his connections on the west coast, he bet against Silicon Valley Bank before its collapse in March 2023. ‘An Albatross’ The short seller believes that the biggest ticking time bomb at NYCB is its $18 billion rent-controlled multi-family loan…
2024-03-07 13:36:00
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