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Strategies & Market Trends : Value Investing
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To: 8bits who wrote (31602)7/24/2008 9:28:42 PM
From: Paul Senior  Read Replies (2) of 78714
 
"its certainly possible that a foreign bank would try to acquire it. Its tough to duplicate the franchise that its built"

I was wondering about that--- what exactly it is that's the franchise and what's valuable about it.

I suspect it's their breadth of branches and maybe their huge base of ATMs. Perhaps it's their mortgage servicing business. Profitable, I presume, and maybe valuable for an acquirer who can build on economies of scale.

Every bank's got ATMs and software, and can increase their installed base. Leasing space or taking over failed bank locations. In current real estate market, that shouldn't be a problem.

So many banks around my neighborhood. I presume borrowers shop around for best loans; depositors for best rates. Nothing proprietary or significantly different about WM from competitors. WM are everywhere though - a convenience for customers and maybe competitive advantage.

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At this time I like Spanish bank BBV. It's got problems because of the decline (collapse?) in Spanish housing market. There's no USA subprime issue though (afaik). The bank is international with operations in Latin America, and is trying to increase its presence in USA: Maybe capture more of the Hispanic market. The bank is down, not beaten to a pulp though, and pays a 4.5% dividend yield. I am in now for just a few shares. I expect upside stock potential is nowhere near WM's possiblity. I just hope the downside to BBV's business and BBV's stock also doesn't have the negative potential that WM has.

finance.yahoo.com
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