JBAXY - Julius Baer: Signa Scandal Presents Attractive Entry

2024-02-05 11:14:10 ET

Summary

• Julius Baer's stock has recently tanked after it revealed it had lent CHF 606 million to a single client, Signa Holding, representing 40% of its private debt loan book.
• The bank has written off the entire loan against Signa and the CEO is stepping down to take responsibility for the lapse in judgment.
• While the scandal is unfortunate, I believe Julius Baer's franchise value remains intact and would view the stock decline as an attractive buying opportunity.

I initiated on Julius Bär Gruppe AG ( OTCPK:JBAXY , referred to as Julius Baer in the rest of this article) a few months ago, with a generally positive view. As UBS ( UBS ) works through its integration of Credit Suisse over the coming quarters, I believe Julius Baer has a once-in-a-decade opportunity to gain market share from client and employee attrition at UBS. However, at the time of my article, I felt that Julius Baer's valuation was fair, so did not assign a buy rating to the stock....

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