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Strategies & Market Trends : Value Investing -- Ignore unavailable to you. Want to Upgrade?

To: Ray Rueb who wrote (20377)	12/30/2004 2:47:00 PM
From: blankmind	Read Replies (2) \| Respond to of 78476

Ray, - you're kidding right? - you missed the fact that CSBK just de-mutualized & is rapidly increasing earnings - & they don't really have 30+ mill shs o/s - its 14 mill - as the 16 mill held by the parent doesn't really count - as they're really like treasury shares - but good luck

To: Ray Rueb who wrote (20377)	12/30/2004 4:25:09 PM
From: Paul Senior	Respond to of 78476

Ray Rueb: Your post requires a detailed response. I hate when that happens -g- I'll try to be brief. I like simple quantitative and heuristic methods which aid in selecting stocks. Stuff that's easy and quick, and that on-average, result in successful investments. My objective is not to reduce the emotion surrounding the purchase or holding of a stock: The emotion is always there - at least for me. I accept that there are conflicting analytical tools. An objective for me would be select from such methods so as to enable me to INCLUDE a stock in a portfolio - which is different from using these methods to discard or eliminate a stock from consideration. In other words, if one method might reject a stock, but by another equally relevant method, it looks like a buy, I will go with the buy. It seems to me that one will do better analyzing a particular business by methods that are most appropriate (however defined) for that business. For banks, I am led to believe there are a couple of key metrics - efficiency ratio and roa. I focus on roa because it's simple to find (Yahoo) and easily tracked over several years, and it seems to work mostly okay. Apparently Bloomberg tracks prices paid in takeovers vs. total assets of the acquired bank. Using Bloomberg data collection up until 2003, apparently CSBK is too expensive to be an attractive candidate at current price and assets. However, my Bloomberg info. is out of date - prices paid have gone up. My point: here we have a possibly negative metric for CSBK, one I choose to ignore (at my risk of course -g-). Assuming roa is important, then what's needed is a way to evaluate various roa's. That is, if Bank X has an roa of .6% (lousy) vs. Bank Y of 1.5% (good), we still need to figure if it's X or Y (or neither or both) that are bargain priced. Those roa figures have to be put in context. We can discuss this further, but for CSBK there's a trump card, and that is, if we're correct, the stock is selling below book value (~14M shares outstanding). That rarely happens with bank stocks, esp. profitable ones, and so it is a buy. (A buy for me, anyway. Again, I already have a diverse portfolio with many bank/bank-related stocks, and so I'm not talking about making CSBK 5% of a portfolio. Seems to me though I ought to be able to hold on to a few shares of CSBK for a couple of years to see what develops.) Another trump card would be if we saw significant amounts of insider buying at current or higher prices. (Lots of insider ownership could be a positive too, although for small banks, one might wonder for whose benefit the bank might be run.) All jmo. I am not an expert in analyzing bank stocks. And I have been wrong many, many times.