Investors should look to buy into banks that don’t need to raise further capital, but avoid those that do, Clem Chambers, CEO of ADVFN, told CNBC Friday.
“The question is: are certain banks going to have to dilute their shareholders further? And from an investment point of view, if you believe that a bank isn’t going to have to dilute its shareholders, there’re very good long, even from a relatively elevated position,” Chambers said.
“If you think there is any prospect of a bank having to do an equity raise then they’re not a long, I would say a short,” he said.
Swiss wealth manager UBSissued a new share offer in a bid to raise $3.46 billion from the market Friday, sending its shares nearly 3 percent lower as investors bulked at the news.
“When banks do dilute, the shareholders really do get it in the neck,” Chambers said.
- Watch the full Clem Chambers interview above.
Disclosure information was not available for Clem Chambers.