Traders Are Loading Up On Two Financials After Big Drops

Several financial stocks, which were hit hard during the financial crisis, have been trading at much lower levels recently as retail traders are starting to take advantage of the dip.

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The strategist, Peng Cheng, pointed out in an email statement to clients on Wednesday evening that, despite the general pullback of retail traders from individual stocks, two names in the financial sector are surprisingly popular at the moment, Charles Schwab and Truist.

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"Retail traders have net sold a total of -$1.8B worth of stocks this past week, as measured at a single share level. TSLA -$310MM, AAPL -$208MM, and AMZN -$151MM were the only large-cap tech names to be lowered. In contrast, we have seen buying in the Financials sector, led by SCHW (+$56MM) and TFC (+$14MM)," the note stated.

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After Silicon Valley Bank collapsed last month, neither company was viewed as one of the most likely candidates for the next bank run, although the stocks of both companies have also been under pressure along with other assets in the financial sector. In the last month, Schwab shares have lost almost 38% of their value since the start of March, whereas Truist's shares have lost 28% of their value since March started.

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Investors might be more optimistic about these firms because they do not fall neatly into the regional bank category, which has been a major concern in recent months. Investors may be able to benefit from a closer examination of these firms in the coming months.

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Truist was formed by combining BB&T and SunTrust, two prominent regional banks. The size of Truist's assets, at $555 billion, was more than twice that of SVB at the end of December.

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Truist, according to Refinitiv, has a hold rating from half of Wall Street analysts.

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A quarterly report will be released by Truist on April 20.

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As a brokerage, Schwab fits oddly with regional banks since it is known as a brokerage. In a letter sent on April 6, Schwab's management said that overall investor assets grew by $50 billion in March compared with February.

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According to Refinitiv, most analysts covering Schwab rate the stock as a buy or strong buy.

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