If you had invested $1000 in SVB Financial 10 years ago, you would have so much now
HHow much a stock’s price changes over time is important to most investors, as price action can both affect your investment portfolio and help you compare investment results across sectors and industries.
Another thing that can drive investing is fear of missing out, or FOMO. This is especially true for tech giants and popular consumer-facing stocks.
What if you invested in SVB Financial (SIVB) ten years ago? It might not have been easy sticking with SIVB all along, but if so, how much would your investment be worth today?
SVB Financial’s business in detail
With that in mind, let’s take a look at SVB Financial’s key business drivers.
Headquartered in Santa Clara, California, SVB Financial Group is a diversified financial services company. Founded in 1999, the company operates, among others, through Silicon Valley Bank, its principal subsidiary, and offers a wide range of banking and financial products and services. SVB Financial has four business segments:
Silicon Valley Bank: This segment (which contributed 25.9% of total noninterest revenues in 2021) consists of Commercial Bank, which provides lending, deposit products, cash management services, global banking and trading products and services, in addition to certain investment services offers . Other business areas include Private Equity Division, SVB Wine, SVB Analytics and Debt Fund Investments.
SVB Private (2%): This is the private banking division of Silicon Valley Bank and offers a customized range of private banking services including mortgages, home equity lines of credit, restricted stock purchase loans, lines of credit for capital calls and other secured and unsecured lending. It also meets the cash management needs of private banking clients through deposit account products and services.
SVB Capital (17.8%): A venture capital investment arm, it focuses on fund management, which includes funding funds and direct venture funds (or co-investment funds). The segment manages venture capital funds primarily on behalf of third party limited shareholders and the Company.
SVB Securities LLC (formerly known as SVB Leerink) (22.2%): A wholly owned subsidiary of SVB Financial, it provides investment banking services across all sub-sectors of healthcare.
The Company reports its non-controlling interests under the heading “Other items” (32.1%) for these segments, reflecting adjustments required for the reconciliation of results in accordance with US GAAP.
In 2019, SVB Financial acquired Leerink Holdings LLC (“SVB Leerink”). In 2020, the company acquired WestRiver Group’s debt investment business. In 2021, the firm acquired Boston Private Financial Holdings, Inc. and New York-based independent sell-side research firm MoffettNathanson LLC.
As of March 31, 2022, SVB Financial had total assets of $220.4 billion, deposits of $198.1 billion, net loans of $68.2 billion and total shareholders’ equity of $16 billion.
Anyone can invest, but building a successful investment portfolio takes a combination of a few things: research, patience, and a little risk. So if you invested in SVB Financial a decade ago, you probably feel pretty good about your investment today.
A $1,000 investment made in June 2012 would be worth $8,293.74, or a 729.37% gain, according to our calculations as of June 10, 2022. This return excludes dividends but includes price increases.
Compare that to the S&P 500’s 203.08% rally and gold’s 11.67% return over the same period.
Analysts also predict more upside potential for SIVB.
SVB Financial has an impressive earnings surprise history. The company’s earnings have beaten Zacks’ consensus estimate in each of the last four quarters. Loan and deposit growth, efforts to improve noninterest earnings, and global expansion strategy are likely to continue to support the company’s financials. However, macroeconomic and geopolitical issues are likely to continue to weigh on financials in the coming quarters. Increased spending is expected to affect the bottom line to some extent in the near future. SVB Financial shares have underperformed the industry over the past year. Nonetheless, the acquisitions of Boston Private, MoffettNathanson and WestRiver Group’s debt investment business are expected to be earnings accretive and likely to help SVB Financial further solidify its position in the innovation economy.
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The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.