One of Charles Schwab’s main investors, Florida-based GQG Partners, sold off its entire stake in the brokerage in the last month amid banking turmoil following the collapse of Silicon Valley Bank, the Financial Times reported on Friday.
GQG bought into the financial services and brokerage firm in the third quarter of 2022, owning around 1% of the stock. By year-end, it held 17.4 million shares worth $1.4 billion, according to company filings.
But investment managers at GQG told the Financial Times that it sold its stake in Charles Schwab
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from the fear of losses over its bond portfolio and the movements of deposits could hinder the brokerage giant’s growth in the future.
“We didn’t see an existential risk but they were caught up in the sentiment around banks,” Mark Barker, head of international at GQG Partners, told the Financial Times.
Schwab’s stock has tanked 38% so far this year, after a tumble that began in early March in the wake of the collapse of Silicon Valley Bank and two other U.S. lenders. Shares were up 0.41% premarket on Friday.
Schwab customers reacted to the banking turmoil by moving deposits into higher yielding products such as the firms’ money-market funds, which Barker said would cause the broker to lose deposit revenue.
Investors will have to wait until Monday — when Charles Schwab reports results — to gauge any toll from the crisis.
Last week, Schwab reported that its business was “extremely robust,” with an influx of new client money and deposit flows that have been “fairly consistent” during the recent fragility of the banking sector.
MarketWatch has reached out to Charles Schwab and GQG for comment.
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