I hear you, not another Trump post!

Also, sorry for the clickbait, the case is most likely not curious at all. Anyway, here goes:

What happened?

So, I stumbled upon this article. The author, Walker Davis, was apparently scanning a filing of the SNB, where they have to declare all of their US stock holdings as of September 30 2024.

And this is what he saw, among the 2'465 stocks with a total value of 154bn USD:

TRUMP MEDIA & TECHNOLOGY GRO, Value: 1,788,591, Shares: 111,300

The SNB bought 111k shares of Trump's company (DJT), worth 1.8m USD. Scandalous?!

Trump Media was first listed on the US stock exchange in late 2021, so I clicked through all SNB 13-F filings going back to Q4 2021 to confirm that this was actually the first time they reported a holding in Trump Media. And this is correct.

So why did this purchase happen? And why now?

The SNB pursues a market-neutral and passive investment approach by replicating individual equity markets in their entirety. Meaning, they buy an individual stock if it grows (in respect to the total market) and sell a stock if it shrinks, without any more consideration (i.e. no active management is happening).

If you look at the share price development, the stock IPO'd in late 2021 as a SPAC called "Digital World Acquisition Corp." (DWAC). Trump Media went public on March 26 2024, by merging with DWAC.

It's not exactly clear to me why SNB's index-weighted portfolio didn't pick up a position in DWAC in early 2022, as the share price was much higher, albeit only for a very short period of time. [edit: many thanks to /u/LeroyoJenkins for pointing out that SPACs are often excluded from indexes!]

The upwards movement of the stock price in the first half of 2024 is probably the reason why DJT was included in SNB's portfolio in Q3 2024.

What will SNB do next with DJT

SNB is about to report their Q4 2024 filings with the SEC in the next few days. Looking at the stock price development in Q4, the size of the DJT position will likely remain about the same. Stay tuned!

Q&A-Section:

Q: Why does the SNB hold US stocks in the first place?

A: To make money, duh!

Q: Where can I find SNB's 13-F filings?

A: Voila.

Q: What exemptions does the SNB set itself when replicating equity markets?

A: The SNB refrains from investing in shares of systemically important banks and Swiss issuers (due to potential conflict of interests). They also exclude companies that seriously violate fundamental human rights, systematically cause severe environmental damage or are involved in the production of internationally condemned weapons.

edit: ugh, ugly typo in the title… it should read the Swiss National Bank's investment

by onehandedbackhand

6 comments

  2. 1.8 mil is basically pennies in the context you mentioned. Pretty sure there are degenerate traders with more money in it than SNB.

  3. > It’s not exactly clear to me why SNB’s index-weighted portfolio didnt pick up a position in DWAC in early 2022, as the share price was much higer, albeit only for a very short period.

    Broad diversification strategies and indexes don’t include SPACs, because they’re just empty vessels holding cash.

    VTI, SPY, Russell, for example, all exclude SPACs.

    Essentially: this post is just a bunch of nothing-news.

  4. > Why does the SNB hold US stocks in the first place?

    It’s actually not to make money, but to control the value of the CHF. The Swiss central bank is rather extreme, most central banks limit themselves to foreign government bonds and some gold. Another bank on the extreme end of this spectrum is the Japanese central bank.

  5. the snb doesn’t exactly choose what they buy, they give orders to the kantonalbanken. It’s somewhat complicated and the source of many derivatives actually – the snb pays the cantonal banks to hedge, and preserves the right to sell at the price they bought.

    learned this in my studies, so could be a little inaccurate as its been some time. maybe you can find a source explaining it more accurately.

  6. 1.8m USD is like a fart 💨 it’s nothing. Basically a diversity spread.

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