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Strategies & Market Trends : Value Investing

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To: Paul Senior who wrote (24975)	10/11/2006 4:43:11 PM
From: E_K_S	Read Replies (2) of 78748

Hi Paul - I also am heavy weighted in oil stocks. My next largest holding is in natural resource stocks. Both sectors have done quite well this last cycle. The average dividend yield to my portfolio from these two sectors is around 6% based on my average cost. I can peel off some of my shares, pay a long term capital gains tax and put this money into a basket of regional banks but I would be giving up my high net dividend income. I like the long term value these companies provide, so I believe I will continue to hold these shares and add new money to special "value" situations (like COP). My next largest holdings are in the finance sector w/ both large money banks (C & WM) and regional banks (NYB). I am thinking of adding a few more regionals to the mix. Many of the regional banks pay a pretty good dividend that provides a good source of qualified dividend income to the portfolio. Regionals are also candidates for a buyout from the larger money banks which adds a good kicker to the portfolio if you happen to own one. I see you like FNLC. What other regionals do you own or are on your watch list that (1) pay a good dividend, (2) have an excellent "regional" franchise that a money center bank may find a good fit as a buyout candidate and (3) has significant value when measured by the relative BV (excluding goodwill). I think Spekulatius makes a good observation when he states that many of the regionals present bargains for the value investor as the "efficient" market theory may not be pricing these banks at fair value. I believe at this point in the cycle (interest rates have peaked and the next move may be down), the money center banks may be poised to begin another round of buyouts and/or mergers. JPM is rumored to be looking to acquire another "large" bank or special regional franchise. WM was mentioned but perhaps some regionals might be in the offering too. EKS

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