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Strategies & Market Trends : Value Investing
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To: Madharry who wrote (27848)8/22/2007 11:47:31 PM
From: Spekulatius  Read Replies (1) of 79147
 
regarding EBTC
I would avoid all financials. It is just an opaque situation as to what banks have perceived to be liquid cash equivalents may not be so; no one knows what banks exposure is unless they choose to tell you or you audit their books and records.

I own quite a bit of financials still (also i have reduced my weighting since many came back nicely the last few days). the current crisis has increased the difference between the "have" and the "have nots", IMO. The have nots are overleveraged entities holding the hot potatos, the have's are well capitalized institutions which have excess to cheap credit funding and hold the good loans. Most banks should be doing fine, indeed the fallout of the have not's which suppressed margins should help them long term. For example the credit spread for a Jumbo loan has basically doubled for any bank that has the means to keep them mortgage on their book. This will improve operating margins going forward.

Furthermore, thrifts are a nice playground for a value investor and/or nimble trader. For one, they trade very inefficient, they are simple to compare and there is much information around from the FDIC. Nowadays they trade at reasonable multiples and to top it off there is a decent chance of a takeover.
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