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Strategies & Market Trends : Value Investing

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To: E_K_S who wrote (37128)	3/28/2010 7:51:26 PM
From: Spekulatius	Read Replies (1) of 78740

re C - at 4$/share you are basically acquiring a questionable bank at about tangible book value. I think that most bad loans are already reflected in the books, so that is not that much the issue (at least for me). The issue is earnings power and questionable management - Vikram Pandit has almost no banking experience and came to C via a hedge fund acquisition (the hedge fund later folded). C is a Motley Crue of assets, an underperforming US bank operation and investment bank, some quite valuable international bank and consumer credit operations. If those pieces were broken up and individually sold, they should be worth more than book, if the management stays in place (much more likely, imo) the value that is still there may diminish, because more able competitors will go after their business. For me, it's not worth a bet. I can for example buy into GS (if I bet on an investment bank) for a 25% premium to tangible book and I think it's well worth it. If I want to buy a bank business, i buy small regional bank stocks, most of which still go for under tangible book.

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