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Strategies & Market Trends : Value Investing -- Ignore unavailable to you. Want to Upgrade?

To: William Cloutier who wrote (56761)	1/26/2016 9:01:19 PM
From: E_K_S	Respond to of 77756

I agree w/ you that many of the financial institutions (especially the very large banks) are hard to understand. How do you know that stated BV reflects the asset value carried on their books and/or the true market value. I suspect it is much better than in 2008 but have losses been really written off? I suspect not but how can one really tell what their assets are worth (ie fair value). Income is a bit easier to derive. Their spreads will increase as rates slowly rise so margins will get better over time. I like the small regional banks and even the micro cap banks. You take on more company specific risk but a well managed institution in a favorable regional market (like California coast property) can provide good safe returns. I own SNFCA a very small insurance/mortgage and cemetery service company. 30% of their business comes from loans, so you have good exposure to that sector, they sell insurance that represents another 25%, 25% from their land/real estate development projects and 20% from their cemetery business. The company pays a 5% stock dividend every year (xdiv last week). The stock is selling 30% below stated BV which is now around $8.00/share. With only 12mln shares out this stock is thinly traded and the daily volume shows that. My average cost is around the current price but I continue to collect the stock dividend. The company is located in Utah and serves the Mormon community. So not all banks and/or financial institutions are bad investments. Just understand what you are buying. That's hard w/ the very large banks and many of the regional banks. FWIW, I also own New York Community Bancorp Inc. (NYCB). They pay 1 6.5% dividend and never took TARP funds during the financial crash in 2008. EKS