By Rebecca Ungarino

HoldCo Asset Management, the Fort Lauderdale, Fla.--based activist hedge fund known for engaging in campaigns to improve underperforming banks, is zeroing in on two new targets after its most active year yet. It recently initiated investments in Beacon Financial, a Boston-based lender, and Bank of Hope, based in California.

The firm, led by founders Vik Ghei and Misha Zaitzeff, manages about $3 billion of assets for investors, including endowments, foundations, and family offices. The pair, who met in 2010 while working at a fund in New York, founded HoldCo in 2013. They earned a following last year after publicly calling on lender Comerica to sell itself. Fifth Third Bank later bought Comerica for $10.9 billion in the largest bank merger of 2025.

Nine-person HoldCo has found success in an industry that has had little history with activist investors relative to other sectors. As the Trump administration commits to pushing through more bank mergers and easing financial regulation, however, banks are far more likely to strike deals than they had been in the past.

Barron's recently spoke with Ghei and Zaitzeff about the opportunities in activist investing in the banking sector and their latest activist campaigns, which they discussed in detail for the first time. An edited version of the conversation follows.

Barron's: HoldCo recently ended its busiest year to date, with five public campaigns and four conducted privately. How would you describe your approach to investing?

Vik Ghei: Our strategy is dependent on valuation. We always look to find investments at a price that should yield a lot of upside and not a lot of downside when we model draconian assumptions about potential scenarios. We also build in some expectations of banks' shareholder-unfriendly actions.

We will employ activism as a risk-management tool to mitigate the downside that such unfriendliness can create. To the extent we are successful, our engagement could have the byproduct of creating upside. We manage long-term money, so we have the ability to look out far on the horizon.

We didn't have to run a single proxy contest last year at any of the nine banks with which we engaged because we were able to get management to agree to our major demands. To the extent that stops, we wouldn't hesitate to pursue proxy fights, the weapon of choice in such situations.

Misha Zaitzeff: The banks we are invested in have good franchises, deposits, and business models. But one reason regional banks are trading so cheaply is shareholder-unfriendly actions. Four of the five banks we targeted publicly made bad acquisitions. The hope is that if we engage with management to keep them from continuing on that path, we should do well.

How do you define shareholder unfriendliness?

Zaitzeff: The management teams at a lot of regional banks have little skin in the game in terms of equity ownership. There's some component of performance-driven compensation. But the correlation between the banks' size and management compensation far and away exceeds other variables.

Many management teams want to empire-build, and run the biggest thing possible. That will affect management's compensation more than increasing returns would. But the cheapest banks aren't able to grow organically quickly.

Ghei: The best way to grow is through acquisitions, but to do that, banks need to issue shares. They almost never have the ability to buy other banks with cash. They'll issue their own shares and end up diluting shareholders. Often, they buy banks inferior to their own, and issue their shares at cheap valuations, which is the opposite of what they should be doing: reducing the share count, not increasing it.

Beacon Financial, the result of a recent merger between Berkshire Hills Bancorp and Brookline Bancorp , is among your newer positions. Why are you seeking changes at Beacon?

Ghei: We don't think highly of the quality of governance at Beacon, as management appears to prioritize personal interests over shareholder value creation. The valuation is incredibly cheap relative to the franchise -- the stock trades at a single-digit earnings multiple -- and Beacon itself would be a good acquisition candidate. As long as the value isn't further destroyed through other problematic acquisitions, our investment should do well under almost any circumstance.

Zaitzeff: The market tends to dislike mergers-of-equals transactions. And in the Northeast, in the Boston area, there are many banks that would love to do an M&A [merger and acquisition] transaction.

Last December, you started building a position in Bank of Hope, which merged last year with a Honolulu-based bank. What is your investment thesis?

Ghei: We think Bank of Hope could be sold. It is undervalued -- with a price-to-tangible-book value of 90%, well below peers -- and without meaningful shareholder sponsorship. The valuation provides significant downside protection and a lot of upside potential. Hope has made some acquisitions but, like some other banks, has built up a lot of capital and doesn't seem to have a framework for returning it to shareholders.

What you can control, indisputably, is how you allocate capital. Yet, many banks refuse to have any sort of framework to evaluate that, and certainly don't communicate about it. To us, that is the cardinal sin.

How have you engaged with Bank of Hope and Beacon so far?

Ghei: We have engaged with senior folks at these institutions and sought to communicate our framework: deploying excess capital where the risk-adjusted return per dollar is highest, which, for Hope, is clearly buying back shares.

Some people think, inaccurately, that we just lead with a deck [a pitch deck of ideas for improving targeted institutions]. People view publishing these decks as a hostile act, and assume we're not talking to banks behind the scenes, trying to convince them to take the right path. That is often incorrect.

Often we are working behind the scenes, trying to engage and impress our philosophy on management and the board. Our strong and sincere hope is that the banks in which we invest will adopt a framework consistent with our approach. We're more than willing to compromise on the precise nature by which that occurs. We don't expect it to be exactly what we ask. But when our philosophy and approach aren't understood or are flatly rejected, we feel compelled to go public with our activism.

We have made clear with both Beacon and Hope what we hope will happen: that management will adopt a shareholder-first capital-allocation framework. Practically, this would mean buying back stock if they don't get acceptable offers. We don't want them to sell at any price, but if the right offer at the right price comes along, take that. We are giving them the benefit of the doubt that they will come to this conclusion on their own.

[A Beacon Financial spokesman told Barron's: "We're pleased with the progress of the merger integration, including the core systems conversion completed less than 60 days ago, solid client retention, and the comprehensive rebranding of Beacon Bank now under way. The board and management team remain focused on achieving merger synergies and executing a strategy that positions the bank for long-term success. We maintain an active dialogue with our stockholders and welcome constructive engagement."

A Bank of Hope spokesman declined to comment.]

Shares of BankUnited, among HoldCo's largest positions, hit a record high in February. How has your thinking about BankUnited shifted over time?

Ghei: Misha and I have looked at BankUnited for many years. We have engaged with the company. We see a bank that used to be a really bad bank, and now is a much better bank. Partly, that is because management has done some decently good things -- not as good as they say they have, but objectively, they have done some decently good things.

One credit to management is that they don't intend to do a bad acquisition. They take some pride in that. They also have coveted geographies in Florida. Those are positives and some of the reasons we haven't felt compelled to be overtly activist.

Zaitzeff: Banks sometimes have an unfair taint because they did badly during the [2008-09 financial crisis]. That is one reason Hope and BankUnited both trade so cheaply. Separately, BankUnited is on some brokerage analysts' lists of banks that would make good acquisition targets.

Do you agree?

Zaitzeff: Yes, 100%.

[A BankUnited spokeswoman declined to comment.]

You pared your position in Citizens Bank, the Rhode Island--based bank whose shares recently hit a record. Why?

Ghei: In 2020 and 2021, when rates were very low, there were enormous amounts of deposits in the system. Many banks invested those deposits in fixed-rate assets at rock-bottom rates. They paid the price when rates rose, and Citizens was one of the biggest offenders.

When we started buying this stock and building a large position post--"Liberation Day" [the date of President Donald Trump's April 2025 tariff announcement] and ran the math, we realized this stock was incredibly cheap on the basis of metrics such as price/earnings. Many of the banks we bought had that characteristic, but the CEOs failed to realize they were underearning. Citizens recognized it and was willing to admit it had made a mistake [with those investments].

Zaitzeff: Citizens has done a good job in terms of capital allocation. It has been disciplined. The risk is that now that the valuation is higher, the bank will change its stripes. But so far, so good.

[A Citizens spokesman declined to comment.]

HoldCo has made its name through several contentious campaigns. Alternatively, which banks do you see as particularly shareholder friendly?

Zaitzeff: One thing you'll notice in a lot of our decks is that we haven't been so critical of how management teams are performing operationally. We are more focused on areas where we can see the math, where we think things are more under the management team's control, such as capital allocation.

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