'Bond King' Bill Gross snaps up battered Western Alliance and PacWest shares despite regional bank turmoil

• "Bond King" Bill Gross loaded up on regional bank stocks even as small US lenders navigated the recent turmoil.
• The billionaire investor scooped up shares of Western Alliance and PacWest Bancorp, he said in an investment outlook.

"Bond King" Bill Gross snapped up shares of regional US lenders even as they came under intense pressure following the collapse of Silicon Valley Bank (SVB) last month.

The billionaire investor scooped up stocks including Western Alliance, PacWest Bancorp, Synovus Financial as well as SPDR S&P Regional Banking ETF, he said in an investment outlook Friday.

Regional lenders have borne the brunt of the confidence crisis triggered by SVB's sudden meltdown in early March, with Western Alliance and PacWest shares down 17.81% and 9.32% since then.

The poor showing reflected investor concerns that smaller lenders could be hit by the same problems faced by SVB, sparking a run on deposits.

With regional bank stocks trading at a steep discount of about 60% of the value of their net assets, combined with a return-on-equity of around 10%, it offers "an enticing long-term investment," according to Gross, who co-founded the fixed-income investment giant Pimco.

"I've always told myself and close friends that I wish I could start a bank. It's a license to make money even when run conservatively," Gross said. "Admittedly, regionals will have their cyclical problems if and when a recession occurs but my long-time wish to own a bank is now possible via public markets," he added.

"Many smaller regionals may be gobbled up by larger counterparts at premium-to-market bids," Gross continued.

Gross, alongside Jeffrey Gundlach - who shares the "Bong King" moniker - have sounded the alarm on troubles in the US banking system. The two billionaires have said soaring interest rates and banking fears threaten to trigger a US credit crunch.

Gross also urged investors to be careful as he expects a recession to hit the US economy shortly.