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Somebody who understands banking well, help me with STD

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18

December 31, 2010 – Comments (45) | RELATED TICKERS: SAN

I don't really know a lot about STD, nor am I a banking expert, or an "investing" expert.  I am pretty good at trading based on patterns (not so much TA).  But I do hold two "investments"; BAC and STD.  The one I am having trouble with is STD...I am buying because others are fearful, and don't get me wrong, I am glad the price is dropping so I can pick more up...but how come nobody else on this board is ecstatic about STD?

5% dividend...find me another bank paying that

Trading under book value...very cheap for a bank

Acquiring other banks...shows they are healthy

International exposure...Europe woe's dont completely kill it

 

Am I missing something?  Because this looks like an easy double.

45 Comments – Post Your Own

#1) On December 31, 2010 at 4:26 AM, portefeuille (99.59) wrote:

SAN:SM is expected to pay 0.6 EUR per share as dividend for 2010 and again 0.6 EUR per share as dividend for 2011. It is currently at around 7.93 EUR, giving you a "dividend yield" of 0.6/7.93 ≈ 7.6%. The ADRs should be treated similarly.

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#2) On December 31, 2010 at 4:30 AM, HarryCarysGhost (99.70) wrote:

Valyoo, befreind Teacherman1 he used to be a banker and knows quite a bit about stocks like this.

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#3) On December 31, 2010 at 4:30 AM, portefeuille (99.59) wrote:

Consensus estimates for earnings per share are currently at around

eps2010e =  0.9822 EUR,
eps2011e =  1.17 EUR,

giving you p/e2011 ≈ 7.93/1.17 ≈ 6.8.

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#4) On December 31, 2010 at 4:34 AM, HarryCarysGhost (99.70) wrote:

Or porte :) looks like your set. Those are the two capsters I would say would give you the best advice on a stock like std.

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#5) On December 31, 2010 at 4:39 AM, portefeuille (99.59) wrote:

#4 I have very little knowledge of that area. I have worked as an equity analyst and as "head of finance/controlling" for a start-up, but only for short periods of time and am a theoretical physicist ...

I currently have 250 SAN:SM (STD) shares in my portfolio (see here). My "fund" currently holds 4800 SAN:SM (STD) shares (see here).

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#6) On December 31, 2010 at 12:40 PM, Ticker007 (20.96) wrote:

There's a few nice banks out there and STD is at the top of list. I'd even buy more BAC if it dropped lower.

To many (private) investors are paranoid over banks - except the folks on WS and Warren B.

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#7) On December 31, 2010 at 2:06 PM, IgnoreTheCrowd (< 20) wrote:

I strongly agree with you on this one.

STD, BAC, SNV, HCBK, PCBK, TNCC are my picks for the banks.

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#8) On December 31, 2010 at 4:23 PM, lemoneater (79.19) wrote:

I know absolutely nothing about banks, but have a Happy New Year, Valyooo!

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#9) On December 31, 2010 at 4:53 PM, zzlangerhans (99.69) wrote:

I am sorry to hear about your problem with STD. Sadly, the number one cause of troubles with STD comes from not really knowing a lot about STD. I hope in 2011 you have better luck with STD.

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#10) On December 31, 2010 at 5:43 PM, outoffocus (22.83) wrote:

I have no desire to help you with STDs....

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#11) On December 31, 2010 at 8:34 PM, Valyooo (99.45) wrote:

1) Set myself up for that 2) Happy new years to all

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#12) On December 31, 2010 at 8:42 PM, truthisntstupid (90.35) wrote:

I like HCBK and PBCT

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#13) On December 31, 2010 at 9:02 PM, truthisntstupid (90.35) wrote:

Both HCBK and PBCT refused to take TARP money.

HCBK has increased its dividend every year since 1999, and now yields 4.7%.

PBCT has increased its dividend every year since 1996, and now yields 4.4%.

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#14) On January 01, 2011 at 4:00 PM, MoneyOre (< 20) wrote:

Read this:  STD

Maybe you will become as fearful as everyone else is....

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#15) On January 01, 2011 at 7:35 PM, rd80 (98.46) wrote:

Santander does look cheap.  The problem I see is it isn't all that much cheaper that some peers that aren't headquartered in countries whose debt is in the news.

On the plus side, the valuation is cheap, the bank is well capitalized, and over half its profit comes from outside of Spain, Greece, Ireland, Portugal or Italy.

On the negative side, it's a bank and it's headquartered in a country whose debt is in the news.  The dividend is attractive, but the payout ratio is pretty high, i.e. not much cushion.

At this valuation, I don't think investors are getting much of a discount for the country risk.  If some news piece on Spain or whatever were to drag Santander 10 or 15% lower, it would look very interesting.

Link to an analysis along with shameless self-promotion here.

Fool on and Happy New Year.

 

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#16) On January 01, 2011 at 7:40 PM, TMFBabo (100.00) wrote:

Happy new year!

I'm not a banking expert either (more of a banking noob - I don't invest in banks), but I'll offer an answer anyway.

I agree with your two points: (1) they are acquiring other banks (shows health) and (2) they do have international exposure outside of Spain.

I have not looked at all these figures myself, but things to look at for banks in general:

1. How well-capitalized they are: look at all the capital ratios and such.  I do see that there has been no dilution recently, unlike IRE which has quintupled the number of outstanding shares.

2. How are deposits growing? I think an important concept with banks is to have access to tons of deposits which they can then lend out at a higher rate.

3. How's the net interest margin looking? The wider the spread, the better.  A high net interest margin is an important measure of profitabiliy.  

4. Which direction are NPLs (non-performing loans) going? This has been going the wrong way for many banks throughout the financial crisis.

5. What is the loan portfolio of the bank and what are the risks associated with each type of loan? For example, a US bank will have some combination of mortgages/real estate loans (residential/commercial/industrial), consumer loans, construction loans, agriculture/farm loans, etc.  

6. How safe is its bond portfolio? I've been led to believe banks often hold extensive fixed-income portfolios - there must be sovereign debt exposure there.  Specifically for a bank based out of Spain, I'd think it would at least hold some Spanish government debt.

I haven't closely followed the European situation, but many people I respect seem to believe that STD is an excellent bank.  Still, there are risks and you should make sure you've covered all your bases.

If you want to learn banks quickly, read JakilaTheHun's pitches on banks and such and then try your hand at analyzing a few.  I learned all the above by just trying to write-up PFBI for personal purposes maybe 6 to 9 months ago.  A couple of hours learning what to look at for banks can go a long way.

The financial sector is definitely one I want to learn well, but oil and gas is currently at the top of my list and mining is second (I'm new to both sectors), so my plate is overflowing at the moment.

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#17) On January 02, 2011 at 9:38 PM, Valyooo (99.45) wrote:

Babo,

Thank you so much for that.

For me, I have a bunch of books to read...I am still very new at this, even newer than you are.  What I have nailed down so far is 1) keeping my emotion out of stocks 2) how the stock market works (in reality, not theoretically) 3) how to play patterns 4) some special situations 5) some charts 6) what i consider to be good investments given the economic environment

I do not know much about fundamental analysis.  I am finishing a few books (fractional reserve banking,  a psych book, and then some other book which i cant remember) then i wil start on the fundamentals.  I know how to do this; read financial books, and use investopedia for things i dont understand.

My question is, how do you learn about  a sector?  What ratios to look for, how to seperate a good company from a bad one, etc. Like, how did you learn all about the oil and gas sector, and how to profit from it?  Also, do you go as far as learning the processes of every company, or just how to make money given the situation?

Also, I want to thank you for helping me with a lot of my questions in general on this site.  If I ever make it big (when I make it big...I have confidence that one day I will be very good at this), I will try to return the favor one way or another.

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#18) On January 02, 2011 at 9:47 PM, Valyooo (99.45) wrote:

Babo,

If for some reason you are interested in how I invest (not trade), here is an example

BAC- insiders were buying at 30.  It was trading at 20 earlier this year. The book value increased, and real estate will turn around and BAC is most leveraged toward this.  The whole wikileaks thing was unrealistic, so I loaded up (my biggest position) in the 10.90-11.30 range...Buy when people are scared to own it, when nothing about the fundies change.  I will sell at 25-30.  Why these numbers off the top of my head, and not some fair value calculation? If it was at 20 earlier, and I think it will turn around (but banks will never hit the 06 highs, where it was at 50), why not 25-30?  I will sell on spikes.

The reason i dont do deep fundamental analysis, is between my personal life, my job, school, and trading,  i have about 3 free hours a day.  I would rather be spending my free time reading books about the market and learning how to analyze, then analyzing specific companies.  Maybe I "shouldnt" be in the market in the meantime, but I think being in the market is half of the learning experience, if not more.  Could this style burn me?  Sure, but diversification helps that out, as does good money management.

RD80, 

Nice article, you are right about the payout ratio

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#19) On January 04, 2011 at 8:29 AM, Pennyperson (< 20) wrote:

Off Topic

But, you posted this on another Blog and the link takes me no where - what was it? =)

Check out CMZPF.pk

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#20) On January 04, 2011 at 11:24 AM, Valyooo (99.45) wrote:

Its a natural gas stock...not sure why its linked like that

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#21) On January 06, 2011 at 1:15 PM, truthisntstupid (90.35) wrote:

Valyooo

I totally agree with your priorities and the depth of your analysis.

I myself disagree with fair value calculations and tried to explain why in a blog that actually made it sound like I think any form of valuation is irrelevant, but that was just a poor choice of title.

I think fair value calculations involve too many difficult assumptions and too much speculation to be accurate.

If I were going to buy BAC, my thought process would have been much along the same lines as yours.  I don't have to try to pin a precise value on a company in order to know whether I'm interested.  I look instead at current and historical P/E as well as forward P/E, trends in revenue, margins, interest coverage, retained earnings, payout ratio, dividend growth rate.  

None of these require me to guess at the value of inventory levels, some of which may or may not still have any value (esp. in a tech co.);  or make an attempt to figure out if some of their older equipment still being carried on the books is or is not still actually worth anything, or in particular, is worth the value it's being carried at.

How close can we come with fair value estimates (guesses)?

I too prefer to spend most of my time learning and reading than analyzing specific companies, but I don't think I'll ever spend a lot of time trying to pin a dollar value on a specific company.

However, if people much smarter than I am (like Babo)  want to try, I'm sure they probably come closer to an accurate value than I would.  I just don't think I need to try to pin a precise value on a company in order to accomplish my goals as a dividend growth investor.

This is why I believe I and maybe many other people may be better off being dividend investors than value investors.  There is inherently less speculation involved.

 

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#22) On January 06, 2011 at 2:37 PM, Valyooo (99.45) wrote:

From your comments on all of my blogs and vice versa, I think we have a lot in common.

Besides the fact that it is very hard to put a fair value on a company...I'm gonna be honest...who wants to spend the time on it?  To analyze every single major asset and every single product would take close to 20 hours...even a very thorough analysis without looking at every single item would take like 6-7 hours.  Not that I don't want to spend 6-7 hours investing, but if in 6-7 hours of research I could either 1) Come up with a good guess of what I could consider fair (disregarding how the market works, which often does not reach fair value for a long, long time) or 2) Learn brief overviews of 5 new companies AND read a bunch of blogs about different sectors.  Even if I get blindsided by not being thorough and 1 of them tanks hard, the other 4 will make up for it.

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#23) On January 06, 2011 at 2:51 PM, truthisntstupid (90.35) wrote:

Well, I've never read a 10K...and with my lowest return from an individual stock being around 25% counting dividends and capital gains when I sold, I'm not inclined to.

 I've done very well with the level of analysis that I do.  I want to get better and better at digging the information I want out of the financial statements, and I will.  I think (no, I know) that's enough.

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#24) On January 06, 2011 at 3:01 PM, Valyooo (99.45) wrote:

I like your style.  May I ask your age and what you do for a living?

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#25) On January 06, 2011 at 3:57 PM, truthisntstupid (90.35) wrote:

I'm an old fart, I'm 53.  You know what I do, Valyooo.  You've read and commented in some of my blogs.  I'm a partially disabled restaurant cook that once came within a stone's throw of a BA in accounting, and the same things that forced me to have to drop out also kept me from being able to go back for going on sixteen years now.
I use investing to supplement my income and raise my standard of living above what it would otherwise be.  I figure I have an edge over 99% of the people where I live that just stick their money in the bank.  
People think I'm wrong to not care a whit about whether I beat the market or not.  But the market and individual stocks also serve another function for me:  they make saving fun!
A person who makes this a hobby will beat the market long term.  They don't have to try.  As far as it not making sense to do the "work"  (work?  PLAY!) of picking individual stocks if I'm not beating the market, when a person goes fishing that doesn't make much sense either...they could most likely spend a lot less money going to the store and buying fish...right?
But people say that no doubt looking at my CAPS score.  I get irritated by that because my CAPS picks are made the same way I pick stocks in real life...just a little less research, but in a year or two my CAPS score should look a whole lot different than it does now...2/3 of my CAPS picks are only a few weeks old.
To judge someone's performance in an investing game based on that is shortsighted.  They should look at my older picks, and of these, the ones that are down considerably  also have rather lengthy pitches that explains why I'm sticking with them, and why time will prove to have been my ally.
Well, I've probably bored you long enough....

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#26) On January 06, 2011 at 4:11 PM, Valyooo (99.45) wrote:

Haha you have not bored me at all.  I forgot, I did know what you do, sometimes I forget who is who (especially since today I am doing like 25 things at once).  I remember more  peoples philosophy and if I like them than profession.  I knew you were in your 50's, I won't forget your age.

I disagree about beating the market...I do think it is important (not in caps, but in real life).  But I also think its fun to buy the SPY dips and sell the spikes.  

The stock market is my favorite game of all time, and I have a lot of fun doing it.  I really hope I get a job trading/investing one day, because it is the only thing that I currently know of that will motivate me to spend long days working for somebody else for the rest of my life.

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#27) On January 06, 2011 at 4:23 PM, truthisntstupid (90.35) wrote:

Please remember what my returns have been.  Perhaps I would care more about "beating the market"  if  I never did "beat the market."

My point is that beating the market seems to happen automatically in the long run with my style of investing, and isn't something one has to consciously  try to do.  My thesis is that good stockpicking, and holding long enough to let the dividends do their job, will win out.  It has so far.

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#28) On January 06, 2011 at 4:28 PM, truthisntstupid (90.35) wrote:

I do hope you get that job too, valyooo...it was the reason I myself was majoring in accounting....I've been an investing bookworm for a lot longer than I've had the discipline to quit blowing all my money and actually use the knowledge I've accumulated in 25-30 year of reading, dreaming, and doing nothing...

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#29) On January 06, 2011 at 4:34 PM, rd80 (98.46) wrote:

A person who makes this a hobby will beat the market long term.

There's a truth that most certainly isn't stupid.

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#30) On January 06, 2011 at 5:31 PM, Valyooo (99.45) wrote:

I know you beat the market, I was just saying. I completely agree with you. Thanks for the wellwishing.  And you dont "do nothing", you supplement your income and you help out a lot of people on caps.

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#31) On January 06, 2011 at 5:42 PM, truthisntstupid (90.35) wrote:

Thanks, rd80!

 

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#32) On January 07, 2011 at 8:00 PM, TMFBabo (100.00) wrote:

My question is, how do you learn about  a sector?  What ratios to look for, how to seperate a good company from a bad one, etc. Like, how did you learn all about the oil and gas sector, and how to profit from it?  Also, do you go as far as learning the processes of every company, or just how to make money given the situation?

@Valyooo: That’s a very loaded paragraph.  I’ll attempt to answer it as best as I can.

Every sector is different.  Some are simple (dry bulk shipping - or shipping in general) and some are complicated (banking, insurance).  The ratios to look for each sector are different.  You can look at the same ratios for every sector if you want, but you must know what levels are appropriate for each sector. 

In general, it’s important to learn the supply and demand fundamentals for each sector.  Supply and demand in the end will be at the heart of determining price for whatever goods that sector provides.  

Examples:

Banking: supply is money/deposits (you can imagine what might affect supply), demand would be people wanting to borrow money.  This varies with interest rates and economic demand.  Loans might be for consumers (student loans, debt refi, home remodeling), real estate (residential/commercial), etc.  (I’m still a banking noob, so someone can correct me on this little section on banking)

Dry bulk shipping: supply is all of the ships.  Each company will have different ship sizes of different ages.  Demand is driven by iron ore, thermal/coking coal, agricultural, and other demand.  The direct customers of the dry bulk industry are the suppliers of those goods.  To dig deeper, the suppliers of those goods will have a lot of goods to ship if those commodities are in demand.  Iron ore demand is driven by steel demand (so is coking coal), thermal coal demand is driven by demand for electricity (the major customers are manufacturers), and so on.

As far as the oil and gas sector goes, I’d look at the following:

1. Depending on whether it’s oil or gas (or both), I’d try to determine supply and demand fundamentals for that commodity.  For oil: you might use things like GDP growth, industrial usage and/or demand, rates of travel vs. historical periods, and other things to forecast demand.  For supply, you must look at what companies have what oil assets.  Not all oil supply is the same! Different oil fields (and deepwater wells) have different breakeven costs.  Whether those fields operate will depend on the demand and where that drives the price.

2. Does the company trade at a discount to reserves? Companies often forecast the net present value of future cash flows for you: PV-10 (discounted 10%).  PV-10 has a dollar value, so you can compare that to market cap or enterprise value.

3. What assets does the company own and what are breakeven costs for those vs. industry averages? For example, a $4.00 breakeven for a gas field is great, while there are also higher breakeven gas fields out there.  Keep in mind that different companies have different cost structures too, so two companies operating in the same gas field (The Jonah Field for example) might have very different breakeven prices.  Also, F&D (finding and development) costs are very important – this is like oil and gas capex.

As far as learning about different companies, you have to learn how different companies operate.  How do companies make money? Who are their customers and suppliers, do they require high or low fixed assets, do they require high or low inventories, etc.  There’s no one correct answer.  When I try to learn a new sector from scratch, I look up a bunch of companies, see what other people have to say about them, and how to determine one company is undervalued vs. others (this will be intuitive – for example, oil companies with more reserves than the next guy might be more undervalued).  

The next thing to do is to pick a few companies and to read the filings, listen to conference calls, etc.  Eventually, you’ll begin to understand the industry jargon and how these companies make money.  Analysts on conference calls will also ask certain questions that might show you what’s important (although they don’t always ask the best questions).  

I’m not sure you’ll be doing everything I just said, because you did tell me deep fundamental analysis is not your thing.  In the end, though, what I'm doing is analysis.  As an analyst, this is the stuff I aim to do.  If you want to be an analyst one day, you may need to learn these ways too. 

Buy/sell side analysts on Wall St. will have to do very in-depth analysis, while I have no idea what traders might need (I forget exactly what you wanted - trader, analyst, etc. but I did see that you want some sort of finance position)

Hope that answers your question somewhat.  I don't intend to write too much more, because at that point, I might as well write a book.

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#33) On January 08, 2011 at 4:17 AM, Valyooo (99.45) wrote:

I really appreciate the comment.  I never really explained myself in the past...currently I am pretty good at trading, and I think it (however illogical) is the most reliable...but I do reallly want to know how to do in depth analysis.  The only thing is trading is intuitive for me while investing is not, and there are so many other things I want to do during my last year of college.  But there are a crap load of days where I wish I was a better analyst...I understand the importance of it.

I don't know where to start exactly while learning stuff, so what I have been doing lately is trying to make a list of what to look for in every sector, so in a few weeks I can dig through companies and analyze them  In fact, Griffin416 is doing me a favor and picking companies from different sectors and choosing a good, bad, and medium company from each and making me tell him which i think is good, bad, etc., to try to analyze fundamentals.  So far, from you I have banking and oil/gas (banking from others too), mining from tmfsinchiruna, retail from other websites, reit's from other websites, utilities from benjamin graham, railroads from sockmarket and benjaman graham, and a few more. Once I graduate, hopefully I will be either invest\ing or trading for a living (either one is good with me, though naturally I am a trader)because I would love to spend all day listening to conference calls and the like....that stuff is fun for me.  Do you like it more than your previous job?

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#34) On January 08, 2011 at 10:36 AM, TMFBabo (100.00) wrote:

I believe understanding businesses and the accounting for them is MOST important (others will disagree, but this is my opinion).  I think combining some level of technical analysis and things that you look for when you trade are actually useful, but I believe the one thing you should definitely learn is how to analyze businesses.  Every analyst at the Fool would tell you that, as would almost every buy/sell side analyst in the industry.

I actually don't get to sit around and analyze companies all the time - I have duties for my TMF services (Alpha/Big Short), some other duties, and learning sessions and assignments (I'm in a development program).  I do get some time for analysis during the day, but I often do it in my free time if I really want to get some companies analyzed.

You should add speedybure to your mining people.  My favorite for both banking and REITs is Jakila.  I'm flattered that you would include me in the banking group, but I don't feel very comfortable with banks.  My biggest strength is actually dry bulk shipping, because it's a simple business.  I spent time analyzing the fundamentals here - I recommend checking it out to see how to analyze an industry from scratch (it would be much more comprehensive if I wrote it today - I was just getting into the swing of dry bulk when I wrote that blog).  

That dry bulk post I linked is actually a pretty good post for beginners to learn about dry bulk shipping.  You can apply that general framework to other sectors as well (I certainly have).  You'll see that supply and demand side fundamentals are of utmost importance. That includes learning the business, how companies make money, what might cause more business to flow in, how to compare one company's assets vs. another company's assets, etc.

I'm even newer to oil and gas than I am to the financials, but I intend to become knowledgeable.  My first real exposure to oil and gas was over the Summer - I did try to read annual reports, but I found myself completely lost.  I'd say most of my heavy-duty learning for oil and gas came in the past 2 months.  I want to give a shout out to HallShadow, who has been analyzing them with me.  My interests ramped up when he asked me about SSN on one of my blogs (which I ended up buying around $1.14).  

I said in my first paragraph about learning accounting: it's VERY important.  A very good beginner's book on accounting is Financial Statements: A Step-by-Step Guide to Understanding and Creating Financial Reports by Thomas R. Ittelson.  I've read it for the first time recently and found it a very good introduction to accounting.  I knew most of the material already because I've learned it through other sources (I did learn some useful things from the book), but I think this book will get you up to speed pretty quickly.  

If you want the accounting advanced class, I'd recommend Financial Shenanigans by Howard Schilit and Quality of Earnings by Thornton O'Glove.  I recommend Financial Shenanigans first, and Quality of Earnings second.  I've had Creative Cash Flow Reporting recommended to me by two people I respect (TMFCanuck and TMFCrow), so you can bet that I'll be buying and reading it within the next few months.

TMFSmashy is one of my favorites for oil and gas AND mining (two sectors I want to learn myself) - although he doesn't do Jakila type analysis here on CAPS too often.  He only started learning in 2007 (Don't quote me on that - I think saw that somewhere on Fool.com), so that shows you that you can become a very knowledgeable person extremely quickly.  While I haven't met him before (I will if he ever visits Fool HQ), keep in mind that guy's probably an animal and learns things faster than most other investors.

I like to think I learn quickly as well, so I'd like to be a beast at least in oil and gas within a few years.  I'm still pretty new to oil and gas, but hungry to learn more.

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#35) On January 08, 2011 at 10:49 AM, TMFBabo (100.00) wrote:

I hate to keep linking my own blogs (lol, no I don't), but here's a good one I wrote in September for coming up with your own process/framework.  I'm most proud of that blog out of everything I've written here. 

Once you have a systematic way to analyze and learn about companies, the only way to learn about them and their sectors/industries is to go out and do the deep research. 

I argue that it's important to understand companies because you must understand what makes a company better than another and how to react to events when they happen.  Comparing ratios can be deceiving: what if one company has capital leases and the other has (off-balance sheet) operating leases? The debt situations of the two companies is simply not equal.  If they rely heavily on leased equipment or properties, then that difference is magnified.

There are tons of other examples, but my point is that a cursory look at the ratios will NOT tell you the whole story - you will miss a lot.  Treatment of different types of leases is accounting knowledge - that's why I'm recommending accounting knowledge too.

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#36) On January 08, 2011 at 1:25 PM, Valyooo (99.45) wrote:

Good stuff, thank you.  I will read over the dry bulk shipping thing later this week, and try my hand at it in a few weeks.  i remember that blog you wrote, it is good stuff.  Ths whole semester I am going to spend a lot of free time doing this.

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#37) On January 08, 2011 at 1:25 PM, Valyooo (99.45) wrote:

Good stuff, thank you.  I will read over the dry bulk shipping thing later this week, and try my hand at it in a few weeks.  i remember that blog you wrote, it is good stuff.  Ths whole semester I am going to spend a lot of free time doing this.

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#38) On January 08, 2011 at 1:43 PM, truthisntstupid (90.35) wrote:

Like I said - way smarter.  And he's right.  One of these days my lazy approach to investing will make me regret it.

But during the summer I work long, hard hours, and I figure the fact that I mainly buy market leaders that pay good divvies and are widely written about and followed will help me a lot.

His dry bulk shipping blog really is awesome.

 

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#39) On January 08, 2011 at 3:06 PM, TMFBabo (100.00) wrote:

@Valyooo: You're very welcome.  The stuff I posted on this blog is easily a blog post.  I may blog something on exactly what you asked - how to go about learning about sectors and how to determine which companies are better than others.  My investing 101 blogs - the instructive ones, have done much better than my few stock pitch ones.  

I'm glad to see you have the desire to learn.  I know exactly how that is, because I was that way (and still am).  

@truthisntstupid: You've backed me up with kind words often and those kind words are always greatly appreciated - thank you!

If you're going to approach investing that way, I would indeed stick to the more well-known dividend stocks.  I have a high opinion of dividend stocks in general, since they do outperform non-dividend payers pretty nicely - I'm sure there are many academic papers that prove it.  

Even as a micro cap lover, I still think dividend stocks are incredibly attractive right now - how in the world are so many stocks yielding more than 10 year treasury notes (this was much more true when the note was well under 3%)? Companies increase value over time (good ones anyway) and they're only going to increase that gap (by raising dividends or simply through increasing company value - and thus share price).  

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#40) On January 09, 2011 at 2:40 PM, Valyooo (99.45) wrote:

Babo, one last question for you (well, maybe not the last one, haha).   Do you own CMZPF in real life?  All of my trades/investments I completely understand why I own, when I would sell and why.  Except for CMZPF, I made the mistake of buying without thinking through.  I had remembered that good blog written up on it (I think by EV08 or some similiar name) and when I saw that NG has a nice chart, and CMZPF popped on new years, I thought it was going to run.  I am now sitting on about a 10% loss in a few weeks, and I don't want to sell at a loss, but I will if you think it is going to keep declining in value.  For 99% of stocks I don't care what others say if I like it...but I lost my head when I bought this one.  I don't mind selling at a loss if it will go down further, but if you think it will go up, I may hold on to it.  It doesn't look like they will go bankrupt anytime soon, but you know better than me.

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#41) On January 09, 2011 at 2:41 PM, Valyooo (99.45) wrote:

Also, the deposit growth, NPL's, bond portfolio, loan portfolio- is all that stuff in the 10-k?  If so, do you know what section?

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#42) On January 09, 2011 at 3:19 PM, rd80 (98.46) wrote:

Deposit growth, NPLs and general portfolio information and breakdown, i.e. commercial RE, residential RE, etc. is in the 10K and 10Q filings.  Exactly where and the level of detail provided varies some from bank to bank.  A big bank 10Q or K is a huge document, but it really doesn' t take much time to skim through one.

Most of that info is usually in recent presentation files or earnings press release statements as well.  It's often easier to find it and make sense of it there.

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#43) On January 09, 2011 at 3:21 PM, rd80 (98.46) wrote:

@TMFBabo,

The stuff I posted on this blog is easily a blog post.

If your TMF responsibilities include writing, you could make a pretty good article series out of how to evaluate different sectors.

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#44) On January 09, 2011 at 8:36 PM, TMFBabo (100.00) wrote:

@Valyooo: Every company is different, but rd80 is spot on.  Read 10-K, 10-Q, and any presentations listed on a company's website (under investor relations) and everything you want will be in there.  If the company chooses not to disclose much of the information, you have to wonder if you would want to invest in that company. 

@rd80: Not a bad idea.  I'm starting virtually from scratch on every sector, so I think the key here is to have a good framework by which I can evaluate ANY sector.  I think I'm on the right track (supply/demand fundamentals).  I can tweak that framework and come up with something, I'm sure.

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#45) On January 09, 2011 at 8:41 PM, TMFBabo (100.00) wrote:

@Valyooo: I don't own Compton - I used to.  I think there's more leveraged upside than with any other natural gas stock, but continued low natural gas prices would be very bad for Compton.  There would be more asset sales or dilution if that were to happen.

I prefer gas companies with at least one of the following: (1) low-cost gas fields or (2) developmental oil plays with nice potential (Niobrara, Eagle Ford, etc).  Compton does not fit that bill.

I think there's a good chance Compton trades a lot higher in a few years, but there's also chance for pain.  My favorite micro gas play is DBLE.  It has both low-cost gas fields and 70,000 net acres of Niobrara (its acreage is in the oil window).  I think it almost matches Compton on upside without being leveraged to the hilt.   

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