ResearchThree Things (2/7)

Three Things (2/7)

Feb 7, 2024

Another bank run

Shares of New York Community Bancorp sank by double digits for the fourth time in five days, extending a collapse that was triggered by a surprise quarterly loss and move to slash its dividend. The bank indicated that it is shoring up its balance sheet following the acquisition of failed Signature Bank and trouble in its large books of commercial real estate.

Given the banking instability we saw in early 2023 (a la Silicon Valley Bank, Signature Bank, and First Republic), investors are selling first and asking questions later. Sharp stock sell offs added to a crisis of confidence that ultimately led to fatal deposit runs at those aforementioned banks. Could the recent moves in stock price foreshadow the same fate?

WeBankrupt

WeWork founder, Adam Neumann, is attempting to buy back the flexible workspace provider that filed for bankruptcy in November, sources familiar with the matter said on Tuesday. Neumann's new real estate company, Flow Global, has sought to buy WeWork or its assets, as well as provide bankruptcy financing to keep it afloat. Under Neumann’s leadership, WeWork grew to be one of the most valuable U.S. startups worth ~$47 billion prior to its dramatic decline. 

What an interesting turn of events this could be. SoftBank gave Neumann more than $1 billion to leave the company he co-founded in 2019 and now, enriched by SoftBank four years ago, wants to go full circle by buying the company out of bankruptcy. It’s speculation for now, but it would be yet another Hollywood ending for a Hollywood story.

Strengthening supply chains

Taiwan Semiconductor Manufacturing is expanding its output in Japan with plans to build a second chip fabrication plant. The second chip factory, also known as a fab, is scheduled to begin operation by the end of 2027. TSMC said the two factories in the Kumamoto site will have a total monthly production capacity of more than 100,000 12-inch wafers and create over 3,400 high-tech jobs.

Major countries around the world have been racing to strengthen their semiconductor supply chains following a chip shortage that disrupted economies around the world. It’s a savvy move by Japanese government officials: not only do they secure mission critical supply but they also create high quality jobs for their constituents. TSMC is certainly benefiting from government subsidies and we don’t expect their expansion to stop with Japan.


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