One day after calling a bottom in well-capitalized banking stocks, Colonial Bancgroup (CNB) and First Horizon (FHN) increased 16% and 30%, respectively (at least as of 10AM PST on July 15, 2008).
I was able to make a short term trade on XLF as well--I put a limit order to buy last night, and when I woke up, it increased 4.3%, so I sold. I can't do a full stock update just yet, as the market isn't yet closed, and I will wait at least three weeks so I can get a better picture of how my stock picks are doing. In three weeks, most of the major companies will have released earnings.
For now, my main holdings are as follows, in descending order of worth: PFE, INTC, CNB, and DBV.
The information on this site is provided for discussion purposes only and does not constitute investing recommendations. Under no circumstances does this information represent a recommendation to buy or sell securities or make any kind of an investment. You are responsible for your own due diligence.
"And if an epitaph be my story, I'd have a short one ready for my own: I had a lover's quarrel with the world." -- Robert Frost
2 comments:
You might want to reconsider your investment in CNB because it doesn't seem like you have a basic understanding of the banking business. Like that issue of loans being assets vs. being liabilities. Your concept of the banks debts vs. assets is similarly flawed.
Here's a better question for you to analyze. How much of the $16 Billion in loans that they have made are they going to have to charge-off? (Just from a quick glance, they have currently set aside $240 million to cover this.) Further, let's say for the sake of conversation that the losses actually wind up being $1 billion. Will they still be "well capitalized" and allowed to stay in business? Or will they become the next IndyMac?
Another question. It looks like they had $3.1 billion in securities available for sale at year end. Of this, nearly half is in the dreaded mortgage backed securities. How safe are these? Many trade at 50 cents on the dollar so does this mean that they have $750 million in this portfolio that is just waiting to be marked to market (and will hit their equity and capital ratios)?
Hope you'll consider this constructive criticism. I've been in your shoes thinking I understand things that I found out later I really didn't.
P.S. I only grabbed these figures quickly from CNB reports which I do not hold a long or short position in so there might be some errors.
(... actually just rechecking I see that most of that $3.1 billion is in CMOs ... same point applies however.)
Maybe respond to me in these comments if your opinion changes after researching these issues.
http://yahoo.brand.edgar-online.com/displayfilinginfo.aspx?FilingID=5754137-104895-280327&type=sect&dcn=0001193125-08-037476
Thank you for your comments. I wrote a post about what you said directly above (July 15, 2008, "CNB and How to Value a Bank").
I appreciate you taking the time to post and educate everyone who views this website.
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