Comerica, Inc. (CMA)

Detroit lender has moved headquarters to Texas, certainly a better place to make real estate loans than Detroit. (One in six moving out of state are going to Texas.) Stock price has dropped substantially with the sub-prime credit confidence crisis. PE of 9.2 and dividend is 7.2%. Ourperform.

Cramer, Canadian Bank Takeover Target

Bought Puts.

still making money even with all of the issues surrounding it.

Over the last 10 years when some bank stocks have increased over 400% and even the mediocre are up 50% CMA stands alone in being down nearly 50%.

The real strength of CMA had been their middle mangement. The bulk of these people have left. Senior management appears inept at identifying and executing any real plan other than milk the corporation until retirement of which the vast majority of senior management is rapidly approaching.

I believe Comerica is a good buy under 50 and that they do not have the residential mortgage exposure that other banks do. Yes earnings were off but I believe they are being dragged down buy the other banks. I bought today at 46.6 and they pay almost a 6% dividend.

Look at where they do business. Nuf said.

Move to Dallas only involves 200 Detroit workers. The vast majority of their local business will stay. Detroit is not exactly a hotbed for commerce right now.

From blog. High-yielding 1-star stocks underperform at least 75% of the time.

http://caps.fool.com/Blogs/ViewPost.aspx?bpid=64590&t=01003935111856027161

#11 yield in S & P 500 as of 04/01/08.

Move of HQ to Texas to be positive, and over-reaction to earnings report today

Lackluster management. Midrange price. Perhaps for the short term, but not the long term.

Probably unfairly thought of as a Michigan bank, they are in many more states than that.

High dividend yield, benefit from steepening yield curve and declining interest rates.

Although there is ample downside protection due to the 4% dividend, and I think that $60 provides a decent floor for CMA - UNLESS - they get bought.

Comerica Incorporated is a financial services company headquartered in Detroit, strategically aligned into three major business segments: The Business Bank, The Retail Bank, and Wealth and Institutional Management. With $58 billion in assets the bank has been expanding its presence throughout faster-growing U.S. markets of California, Nevada, Colorado, Arizona, Washington, Texas, and Florida

The bank has a huge concentration of business in Michigan region, currently facing asset quality deterioration, record unemployment levels and housing market slump. Mid West region accounting for 51% of the loan is facing competitive pricing pressure. That is why more focus is on relationship building without aggression and three fourth of the portfolio have balances of less than one million. Moreover the loan portfolio has a significant exposure in the auto industry, which is on the verge of bankruptcy and union issues. Even the banks inorganic growth plans of acquisition in the booming areas of California and Texas is challenged by the huge price valuations.

On the deposit mobilization front, problems aroused in generating core deposits because of its unique retail strategy of targeting small and niche business instead of going mass market. A cheap deposit garnered out of the escrow business is hindered by the drop in home sales.

The positive inflows would be the $ 47 million settlement from Washington Mutual in lieu of employees leaving the Financial Services Division for employment in the former. Moreover the departed employees would not take business and trade secrets out of Comerica and severe competition for another two years. Other gains would be from the Munder capital management sale, which would be used for share buybacks. The new banking centers opened in the recent quarter would be accretive after 18 months with no immediate benefits, leading to a questionable remark on the stock’s performance.

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The Fear Trade: Investors Pile into Gold and Treasuries
The Dow suffered its biggest one-day point drop in history (although not even close on a percentage loss basis) as investors moved out of stocks into traditional safe havens such as Treasuries and gold (GLD). The failure of Congress to approve the $700B bailout package stunned investors as lawmakers worked through the weekend and practically around the clock to put together a plan that was widely expected to pass. The Senate will return Wednesday night while the House meets again this Thursday following the Jewish New Year holiday recession.

In other signs of worry over a worsening global economic recession, the U.S. Oil Fund (USO) lost more than 10%, the Baltic Dry Index slipped to multi-year lows, the iShares Emerging Markets Index (EEM) was down over 11%, and the Market Vectors Steel ETF (SLX) was down over 16%. Very few stocks closed in the green today, but among stocks that I track BioSante Pharma (BPAX) surged by over 16% on over four times its average volume without any news releases to account for the move.

I plan to focus on the small and micro-cap biotech space since these companies trade in their own universe for the most part based on their clinical development activities regardless of the economy. I own shares of Cytori Therapeutics (CYTX), which had a mid-day surge in the midst of the market sell-off, but still ended the day in the red on light volume. Overall, I am still very cautious on the market and will keep most of my money in cash until the market stabilizes as the velocity of today's downturn around mid-day was unsettling.

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