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Once again: Regional Banks are HOT...

Recs

3

February 22, 2010 – Comments (22) | RELATED TICKERS: WBS , FMBI

Back on Jan. 22 (exactly a month ago), I posted my first Regional Banks are HOT post.

I identified 10 stocks in that post, and today every single one of those stocks was up (I don't think something like that happens every day with any portfolio of any stocks):

RF up 3.6%

FULT 3.38%

CVBF 3.24%

NPBC 3.07%

FITB 2.62%

STBA 2.22%

EWBC 1.93%

WBS 1.23%

PACW 1.65%

FMBI 0.81%

(S&P's return today -0.10%)

I'm confident this is just the beginning...

p.s.

Since Jan. 22, WBS is up 12.2%, and FMBI is up 8.17% 

22 Comments – Post Your Own

#1) On February 22, 2010 at 4:30 PM, russiangambit (29.30) wrote:

Funny, just today I posted a blog on how regional banks are in trouble.

So, why are they hot ? Assuming there is something hot about them other than the stock price?

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#2) On February 22, 2010 at 6:08 PM, APJ4RealHoldings (30.29) wrote:

I have a feeling we will see a big downswing in many regionals/smalls from today's levels.

This will be the year that 200+ small banks will be closed down, that's not good for confidence for a common stock shareholder.

Upon the next market panic for regional banks, I will be buying...sometime later in 2010.

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#3) On February 22, 2010 at 6:31 PM, ragedmaximus (< 20) wrote:

as shanaia twain sings" that don't impress me much",as much as I a hate saying it. we are due for our 2010 biweekly 10% crash and the banks are usually first to go down.

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#4) On February 23, 2010 at 9:57 AM, cthomas1017 (88.52) wrote:

I'm with russian (for a change) ;), dragon.  The old disclaimer holds... Past performance is no indicator of the future.  What are the fundamental drivers that make the regionals HOT?  Investor lemmings following the crowd is a valid answer if you simply are interested in the return on stock price appreciation.

Disclosure: I am short two regional bank stocks, neither of which is listed in this post to date.  So I am very interested in this market segment.  And I have rec'd russian's recent post on this topic.  

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#5) On February 23, 2010 at 1:08 PM, dragonLZ (99.54) wrote:

Investor lemmings following the crowd is a valid answer if you simply are interested in the return on stock price appreciation.

I see a lot of people here on CAPS are more interested in being right about a company they think is a stinker than really making money in the stock market.

I've seen posts that go something like: "I don't know what these people are thinking blindly pouring money into this loser...", and the guy posting is 700 points down on his underperform pick of that same stock.

I mean, at what point does one say: "Lemmings (or morons) who doubled or tripled their money in this stock were right, and maybe, just maybe, I who sat on the sidelines and missed this opportunity (or even worse shorted this stock) was wrong (regardless that I might be right about the company being a stinker)...

cthomas, I'm not saying you are wrong with your call on reg. banks (I don't have a crystal ball), but what did you mean with your statement? I've never heard of somebody investing in a stock and being interested in the return on stock price depreciation... 

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#6) On February 23, 2010 at 2:49 PM, russiangambit (29.30) wrote:

> I see a lot of people here on CAPS are more interested in being right about a company they think is a stinker than really making money in the stock market.

To make money first you have to formulate a tradable idea, and be right about it. This the only reason for asking you how you came to the conclusion that the banks are hot and why you believe they will continue to be hot.

Otherwise you simply have to stick with index investing or throwing darts at the board, i.e. statistical and technical methods in more refined form of the dart-throwing.

Either one is fine with me, I was just wondering which one you follow. Pointing to us that our theory might be wrong in this paticular case without explaining your point doesn't really accomplish anything because even best of traders are only right 60% of the time ( unless you are GS, which manages to be right 99% of the time but I won't go there).

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#7) On February 23, 2010 at 11:54 PM, dragonLZ (99.54) wrote:

To make money first you have to formulate a tradable idea, and be right about it.

Otherwise you simply have to stick with index investing or throwing darts at the board, i.e. statistical and technical methods in more refined form of the dart-throwing.

Russian, are you trying to say your way of investing is the right one (formulating a tradable idea), and everything else is throwing darts? (Did you come up with that or is that from some investing book?)

Can you also explain to me why saying "Media is HOT" back in Oct. of 2009 (I hope you clicked on the link on the top of my post) without a "tradable idea" was so successful? (p.s. Since that post, MNI is up 79%, SALM up 48%, SBSA up 42%, SBGI up 39%, BLC up 28%, ...)

Am I that good at dart throwing or ...?

Once again, just to make sure everybody understands it, I don't know if I'm right about reg. banks. I just think they are hot, and I guess time will be the judge.

And btw., no, I don't have a tradable idea (but I also don't think I'm throwing darts)...

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#8) On February 24, 2010 at 11:03 AM, cthomas1017 (88.52) wrote:

dragon, the question seems very simple to me... Why do you think they are "hot"?  I'm just looking for some rationale as to ***WHY***.  

Here is my "why" I have shorted regional banks.  Very simple.  They are still carrying large amounts of toxic loans in what I believe is still playing out as a deflationary market.  Home sales, new construction & employment numbers continue to deteriorate.  That keeps pressure on these banks to maintain a positive balance sheet.

And anyone that followed my CAPS selections would be misled about my real life investment strategy.  I would like to keep rising to the top of one of the leader boards.  CAPS is a game.  With only a few exceptions, I don't put any weight into a person's investment wisdom based upon their CAPS score.

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#9) On February 24, 2010 at 12:22 PM, dragonLZ (99.54) wrote:

cthomas, I really have no idea why they are hot, I just think they are. If I knew, I'd gladly share that with everybody.

I also wasn't trying to convince anyone they are hot. I give you the stocks and the numbers and you decide (with the final decision made by Mr. Market, of course).

p.s.

Regional Banks are Garbage...

 

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#10) On February 24, 2010 at 12:26 PM, dragonLZ (99.54) wrote:

Sorry, wrong link.

Let me try again:

Reg. Banks are garbage...

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#11) On February 24, 2010 at 5:28 PM, cthomas1017 (88.52) wrote:

Well, at least you're honest, dragman!  I got to hand it to you for that.  And to prove to you that there aren't any hard feelings, I'll +1 Rec you here.  And even better, I'm going to refrain from harassing you on the "Garbage" post.  But with that said, I must confess that I hope russian comes over to that post and rips you a new one! :p

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#12) On February 26, 2010 at 2:23 PM, TSIF (99.96) wrote:

dragon, just saying they are hot with no logic is throwing darts.  Worse still, it's being drunk and throwing darts.

Why do some people call something junk when it doubles and not admit they are wrong is a matter of perception.  What makes them wrong or you right.  Yes, Mr. Market has voted the uptick.  This still doesn't mean that something isn't junk from an investment grade fundamental perspective. IF people want to invest in something for no reason and they end up being right, they don't get an atta boy for me. If they provide some logic in their perspective and are then right then I'd give their analysis more review in the future.

PALM was junk no matter how high it temporarily got to.

Sometimes it just takes time. Granted sometimes CAPs players are wrong. Time changes things, events, we learn, or we were just plain wrong because we didn't include a piece of analysis. If we're given more data, "most" of us will reevaluate.

Good luck. 

 

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#13) On February 26, 2010 at 3:52 PM, APJ4RealHoldings (30.29) wrote:

Dragon

I know why you think they are hot, same reason why you earlier thought that media was hot...

...you see opportunity in sectors/industries the market beats down to a bloody pulp.  the risk in investing in these sectors is that they are likely to fall more, however the reward of potential multibaggers can often times neutralize such risks. 

I saw commercial bank opportunities in Nov/Dec, and invested accordingly....however I believe the hotness of the industry past few months will cool down to much lower levels befoe we move higher (even though these banks are still down SIGNIFICANTLY on a 1yr basis)

Expect to see 500-800 banks closed down before 2012.  Most of these banks are small banks and that will spook not just public investors but will spook institutional investors more so then they already have.  

Current valuation is already banking in bank closures but i dont believe they're factoring anything towards the magnitude of teh closings we will actually see in the next 2 years

The big banks are greedy, ruthless, and want they're paws on some good assets that these small banks have. 

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#14) On February 27, 2010 at 9:38 PM, dragonLZ (99.54) wrote:

Why do some people call something junk when it doubles and not admit they are wrong is a matter of perception.  What makes them wrong or you right.  Yes, Mr. Market has voted the uptick.  This still doesn't mean that something isn't junk from an investment grade fundamental perspective.

TSIF, I hope you are not serious.

Matter of perception, you say. So, back in spring-summer of 2009, people who in RL shorted any of these: TEN, ARM, DTG, CAR, TLB, REV,... (all stocks from "phantom" industries: auto parts, car rental, and retail) you say were right as all of these stocks were "voted" THE top of the top of the fundamental junk.

Who cares those people lost their shirts by placing their bets on these shorts? Nobody, I guess. Those people were still fundamentally right, right?

(And that's exactly why I said above: Cannot belive that some people are more interested in being right than making money...)

PALM was junk no matter how high it temporarily got to.

It didn't matter in CAPS, but believe me, it did in RL (unless you didn't like that shirt anyhow...)

Time changes things, events, we learn, or we were just plain wrong because we didn't include a piece of analysis. If we're given more data, "most" of us will reevaluate.

Oh, OK, now I get it. It's the missing piece of evidence that is to blame for the wrong calls.

Once again, I hope you are not serious...

p.s. Whatever you are drinking, it's waaaay stronger than my Kool Aid... :)

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#15) On February 27, 2010 at 11:19 PM, dragonLZ (99.54) wrote:

APJ, no, I just look at charts. When I see a lot of stocks from the same industry go up, and I like what I see in their charts, I make my "hot call".

But I also like to make these calls when they seem to be "a crazy calls." Love to be contrarian.

Good Luck! You might be right about the banks.

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#16) On February 27, 2010 at 11:26 PM, dragonLZ (99.54) wrote:

TSIF, forgot to ask you: Do you seriously think my chart-eyeballing analysis is "dart throwing"?

I did say I don't have a tradable idea and I don't know why reg. banks are hot, but I do know a little bit about charts.

Not all of my calls are good calls, but a lot of them are. I don't see that my performance is any worse than the performance of the guys who use FA.

p.s. Rule # 1...

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#17) On February 28, 2010 at 9:28 PM, dragonLZ (99.54) wrote:

Sorry TSIF if I was mean with my reply. It wasn't my intention. I just get passionate about this stuff...and my approach to stock picking... I also wanted to be funny, but now when I read it, it's not funny at all. Sorry.

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#18) On March 06, 2010 at 12:22 PM, dragonLZ (99.54) wrote:

Once gain, every single regional bank stock from my liste was in green.

Yesterday, EWBC was up 5.6%, FMBI up 5.4%, NPBC up 5.1%, STBA up 4.8%, CVBF up 3.7%, FITB up 3.2%, FULT up 2.9%, RF up 2.6%, WBS up 2.5%, PACW up 1.2%.

PACW was the only one that underperformed S&P's 1.4% gain.

So far, since my post, WBS is best performing stock with a 12.6% gain, then EWBC up 7.2%, followed by FMBI up 6.5%.

Worst perfrorming (since my post) is CVBF down 2%, STBA down 1.4%, and PACW down 0.9%.

The whole portfolio (if same amount of money invested in each stock) up 3.7%. Pretty much same as S&P's return during the same time frame.

However, I think reg. banks just started going up again, after taking a breather during the month of February...

p.s.

Cthomas, I took a look at both banks you shorted and I like them both. I think they will also outperform the market nicely. Just my opinion. 

Good Luck.

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#19) On March 10, 2010 at 6:08 PM, dragonLZ (99.54) wrote:

And once again, all of "my" reg. bank stocks were up. All of them.

When I posted this earlier today, portfolio of these stocks (if same amount of money invested in each stock) was up 2% for the day. At the end of the day, it was up 2.8%... 

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#20) On March 17, 2010 at 8:25 PM, dragonLZ (99.54) wrote:

If it wasn't for PACW, which was down 0.6% today, once again every single stock from my list would be up for the day.

Since my initial post,

WBS is up 21.7%,

RF is up 16.7%,

FITB is up 13.2%,

FMBI and FULT are up 11.4%, and so on.

Worst performer so far, CVBF, down 1.1%.

 

Just the facts, no opinions...

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#21) On March 19, 2010 at 2:41 AM, APJ4RealHoldings (30.29) wrote:

Congrats.  Regionals have continued their strong push higher and you called it.

As a holder of certain regionals myself, I am very very wary at these price levels and I hold my stance that the 500+ closures/consolidations we will see between now til 2012 will be spook the shit outta the sector. 

I say, hedge your bets

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#22) On March 22, 2010 at 1:43 PM, dragonLZ (99.54) wrote:

Thanks APJ.

Here is the newest update.

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