Aristotle Capital Boston, LLC, an investment advisor, released its “Small/Mid Cap Equity Strategy” first quarter 2023 investor letter. A copy of the same can be downloaded here. In the first quarter, Aristotle Small/Mid Cap Equity Composite delivered a return of 0.93% net of fees, trailing the Russell 2500 Index’s 3.39% total return. Security selection drove the fund to underperform in the quarter while allocation effects positively contributed. Security selection in Energy, Communication Services, and Health Care contributed while holdings in Financials, Information Technology, and Industrials sectors detracted. From an allocation perspective, overweight exposures in Information Technology and Industrials helped the fund in the quarter, partially offset by underweights in Consumer Discretionary and Communication Services. In addition, you can check the top 5 holdings of the fund to know its best picks in 2023.
Aristotle Small/Mid Cap Equity Strategy highlighted stocks like Signature Bank (OTC:SBNY) in the first quarter 2023 investor letter. Headquartered in New York, New York, Signature Bank (OTC:SBNY) provides commercial banking services. On June 16, 2023, Signature Bank (OTC:SBNY) stock closed at $0.1345 per share. One-month return of Signature Bank (OTC:SBNY) was -3.86%, and its shares lost 99.92% of their value over the last 52 weeks. Signature Bank (OTC:SBNY) has a market capitalization of $8.47 million.
Aristotle Small/Mid Cap Equity Strategy made the following comment about Signature Bank (OTC:SBNY) in its first quarter 2023 investor letter:
“Signature Bank (OTC:SBNY), a full-service commercial bank with offices across the U.S., declined after the New York Department of Financial Services took possession of the bank and appointed the Federal Deposit Insurance Corporation (FDIC) as the receiver in mid-March. Shortly thereafter the FDIC entered into an agreement with Flagstar Bank, a subsidiary of New York Community Bancorp (NYSE: NYCB) for substantially all deposits and certain loan portfolios of Signature Bridge Bank on March 20, 2023. We liquidated our remaining position late in the quarter and have provided additional color in the Recent Portfolio Activity section of the commentary below.
Signature Bank (SBNY), a full-service commercial bank with offices across the U.S, was sold from the portfolio following the FDIC takeover and subsequent carve-out of Signature Bridge Bank. Having followed Signature Bank for almost two decades, our investment thesis was predicated on the belief that Signature Bank was a traditional commercial bank with a diversified clientele and business model. The bank has a history of finding attractive industries/ecosystems that have robust deposit needs and serving these areas well. Its unique operating model of acquiring experienced private client teams drove strong deposit and loan growth, while the autonomy provided to the teams helped keep overhead costs low. The company continued to acquire teams to further its growth, and we expected its successful integration of these teams to continue, particularly on the West Coast. On a fundamental basis, we believed the company had been executing well, highlighted by record annual earnings in 2022, expanding margins, loan growth, new teams added, and clean credit metrics. However, given the heightened scrutiny of the recent events involving Silicon Valley Bank and Silvergate Capital, some of the bank’s depositors opted to pull their money creating a run on the bank despite significant qualitative and quantitative differences between those two entities and Signature Bank. The company’s digital payments platform appeared to be the source of investor confusion despite its limited financial impact on the bank’s overall business. As part of this business, Signature Bank facilitated crypto-based transactions by holding customer’s U.S. Dollar-backed crypto tokens as deposits. The bank did not, however, engage in crypto-backed lending or trading and did not hold any cryptocurrencies on its balance sheet. Moreover, the company had recently announced its plans to intentionally reduce its digital assets exposure a move we expected to reduce future earnings power from 2022 levels but would help alleviate some of the negative investor sentiment. Many specific details of what prompted regulators to step in, eventually leading to the downfall of Signature Bank, are still unknown, however, we ultimately liquidated our remaining position late in the quarter after shares reopened for trading.”
damir-spanic-vwaTtIhCjVg-unsplash
Signature Bank (OTC:SBNY) is not on our list of 30 Most Popular Stocks Among Hedge Funds. As per our database, 2 hedge fund portfolios held Signature Bank (OTC:SBNY) at the end of first quarter 2023 which was 33 in the previous quarter.
We discussed Signature Bank (OTC:SBNY) in another article and shared Akre Focus Fund’s views on the company. In addition, please check out our hedge fund investor letters Q1 2023 page for more investor letters from hedge funds and other leading investors.
Suggested Articles:
- Top 20 Most Profitable Banks in the World
- 20 Largest Cement Producing Countries in the World
- Top 20 Countries With Least Smokers
Disclosure: None. This article is originally published at Insider Monkey.
