In today's special edition of Something You Don't Know, you'll find an important briefing from credit analyst and author Martin Fridson, who leads Porter & Co.’s Distressed Investing team.
An Urgent Update from Our Distressed Investing Director
Editor's Note:
Below, you'll find an important briefing from credit analyst and author Martin Fridson, who leads Porter & Co.’s Distressed Investing team.
Martin is “the most well-known figure in the high yield world,” according to Investment Dealers’ Digest. Over a 25-year span with brokerage firms including Salomon Brothers, Morgan Stanley, and Merrill Lynch, he became known for his innovative work in credit analysis and investment strategy. Now, he’s the director of Porter & Co.'s new Distressed Investing advisory, where we examine the "greatest legal transfer of wealth in history."
Friends,
In the space of three days, we’ve witnessed the second and third largest bank failures in U.S. history. Both Silicon Valley Bank and Signature Bank were profitable, with investment grade credit ratings as of last Wednesday. Price drops of 63% and 38% last week show that the collapses were huge surprises to the market.
Banks are a special breed of companies. They can seem to be going along fine and then wham!—depositors lose confidence. The bank is hit with massive withdrawals and suddenly it has a liquidity crisis. This is very different from the long, drawn-out deterioration that typically moves industrial companies and retailers into the distressed category.