Citadel discloses 5% stake in Western Alliance amid sell-off

(Reuters) – Hedge fund Citadel on Tuesday said it bought a 5.3% stake in Western Alliance (NYSE:) Bancorporation, sending a strong signal of confidence as the company was swept up in growing fears of a broader financial crisis after two other banks were seized.

Western Alliance’s share price, which had tumbled on Monday, shot higher on Tuesday, rising as much as 43% shortly after the opening of trading. Earlier in the morning, its shares had been briefly halted for trading.

Citadel, run by billionaire Ken Griffin, earned $16 billion in profits for investors last year and its trades are closely watched by markets for signs of trends. Last year’s returns made Citadel the most successful hedge fund ever.

A Citadel spokesman declined to comment beyond the regulatory filing in which the investment was detailed.

Western Alliance was one of a number of banks caught in a crippling sell-off since last week when regulators shut down startup-focused bank SVB Financial Group that triggered worries of a contagion and rippled across financial markets. Signature Bank (NASDAQ:) was also shut down by regulators.

Earlier on Tuesday, CNBC reported that Ron Baron said he “modestly increased” his position in broker Charles Schwab (NYSE:) to take advantage of a double-digit sell-off.