First Republic Bank (NYSE:FRC) saw a strong rally yesterday after a group of banks agreed to deposit billions of dollars at FRC. However, well-known hedge fund manager Bill Ackman wasn’t too convinced about the move. Indeed, he labeled the deposits in a tweet as a “fictional vote of confidence” and warned that FRC’s “default risk is now being spread to our largest banks.”
Ackman called the move a half measure and said the “press release announcing the $30B of deposits raised more questions than it answers. Lack of transparency causes market participants to assume the worst.” He ended his tweet by saying, “We are beyond the point where the private sector can solve the problem and are in the hands of our government and regulators. Tick-tock.”
Turning to Wall Street, FRC stock has a Moderate Buy consensus rating based on seven Buys, 10 Holds, and one Sell assigned in the past three months. However, it’s worth noting that most of the Holds came in the past week after the crisis started. As a result, sentiment among analysts appears to be in the process of shifting.