'We're trying to shame them': Upstart activist investors target America's underperforming banks

Core Viewpoint - HoldCo Asset Management, a hedge fund based in Fort Lauderdale, Florida, is challenging American banks, particularly regional lenders, to improve governance and shareholder value, threatening public campaigns against underperforming management [1][4][5]. Group 1: Activism and Mergers - HoldCo successfully pressured Comerica to agree to a $10.9 billion merger with Fifth Third, marking the largest bank merger of the year [2]. - The fund has initiated activist campaigns against Eastern Bank and First Interstate, with plans for a proxy battle against Columbia Bank, which has $70 billion in assets [3][5]. - HoldCo's activism is reviving a trend in an industry that has been largely insulated from such movements since the 2008 financial crisis [4]. Group 2: Market Conditions and Opportunities - Regional banks are currently vulnerable due to struggles following the 2023 crisis involving Silicon Valley Bank and First Republic, making them attractive targets for activists [5][13]. - The current regulatory environment under the Trump administration is perceived to favor mergers, providing activists with a clearer exit strategy [5]. Group 3: Management Critique - HoldCo's founders argue that many regional bank CEOs prioritize personal financial gain over shareholder interests, leading to undervaluation of their banks [8][9]. - Compensation structures incentivize CEOs to pursue acquisitions that may not benefit shareholders, with boards often acting as rubber stamps for such decisions [9][12]. - The performance of regional banks has lagged behind larger peers and broader stock indexes, with the S&P Regional Banking ETF still 14% below its 2021 peak [13]. Group 4: HoldCo's Strategy and Background - HoldCo has amassed over $1 billion in regional bank shares and is employing a strategy of public shaming and proxy battles to enforce accountability [15][32]. - The founders, Ghei and Zaitzeff, have a history of identifying undervalued assets and have built their reputation through confrontations with bank management [22][29]. - Their approach includes direct discussions with bank CEOs and public presentations to advocate for shareholder-friendly actions [16][21]. Group 5: Future Plans - HoldCo intends to continue its activist approach, planning to publish reports on banks that destroy shareholder value, even if they do not hold stakes in those firms [32]. - The firm is also targeting Bank United, having acquired nearly 5% of its shares, and plans to initiate a proxy battle unless management agrees to enhance shareholder returns [31].