Julius Baer

Julius Baer is the cleanest pure-play private bank trade in Europe — and exactly that purity is what made the Signa-Holding exposure so painful. The CHF 586 M loan-loss provision against Rene Benko in February 2024 and the second tranche of CHF 130 M in November 2024 cost the previous CEO Philipp Rickenbacher his job and crashed the stock to CHF 41 in early 2024. From there, CHF 67.78 today is a partial recovery, not a victory lap.

New CEO Stefan Bollinger (ex-Goldman, started January 2025) inherited three problems: a private-debt portfolio that produced lower returns than expected, a cost base that grew faster than AUM, and a board credibility gap with Swiss regulators (FINMA). His January 2026 strategy update did three things: (1) full exit from Private Debt by end of 2027, (2) CHF 130 M cost reduction by 2027 (8% of OpEx), (3) raised the dividend payout-ratio floor to 50% with a CHF 400 M buyback authorization.

The underlying business is still extraordinary: CHF 497 bn AUM as of end-2025, 67% from clients with >CHF 5 M ultra-high-net-worth status, gross margin on assets above 80 bps — among the best in pure-play private banking. The bull case is mean-reversion to a 0.85% pre-tax margin on AUM (currently 0.67%) plus a buyback shrinking the share count by 4% per year.

Top holders as of Q1/2026: BlackRock 5.1%, Norges Bank 3.4%, Causeway Capital 3.0%. No new strategic stake-builders in the past 12 months — the Bollinger turnaround is a value-fund consensus thesis (Pzena, Causeway, Harris Associates all in via 13F or equivalent) without a celebrity-investor bid.

Insider activity since the new CEO appointment: Bollinger himself purchased CHF 1.5 M of shares in March 2025 at CHF 51 (now CHF 67.78, +33%). CFO Evie Kostakis bought CHF 250k at CHF 48. Board chair Romeo Lacher converted his entire annual fee into shares for FY2025. The insider buy-to-sell ratio (count of trades) is 6:1 — the highest in any Swiss-listed bank for a 12-month rolling window.

Short interest sits at 1.9%, having dropped from 4.4% peak in March 2024. Securities-on-loan data from IHS Markit shows hedge-fund borrow demand is normalizing.

Forward P/E of 11.3x against a 5-year average of 13.2x — a 14% discount despite the Bollinger cleanup being well advanced. Price-to-Tangible-Book at 1.7x, vs Swiss peer Vontobel at 2.4x and EFG International at 1.5x. If pre-tax margin reverts to 0.82% and the buyback executes as authorized, fair value 12 months out is CHF 78-85 (HSBC: CHF 80, JPM: CHF 82, UBS: CHF 79). That's 15-25% upside plus a 3.8% dividend — a ~20% total return base case. Bear case CHF 55 (-19%) if NNM stays weak and FINMA adds capital surcharge.

1. August 2026: H1/2026 results — NNM trajectory is the single most important number
2. Q4 2026: Investor Day update on Private Debt exit progress and cost-reduction milestones
3. February 2027: FY2026 results + final dividend decision + likely buyback extension announcement

Julius Baer is a value-recovery trade for investors who believe Swiss private banking is structurally still a great business and that Bollinger will deliver the cost-out without breaking the front-office franchise. I find the asymmetry interesting: 25% upside on margin reversion, 19% downside if FINMA hits with a capital surcharge. The 3.8% dividend pays you to wait, and the buyback shrinks the share count silently — a Daniel-favorite combination. I size this as a 2-3% position because the Signa episode showed me that risk-control at Julius Baer is not best-in-class. The trigger to add more would be one clean quarter of CHF 5 bn+ NNM and FINMA explicitly closing the operational-risk review.