Ashleigh Rogers
Long/short equity, growth at reasonable price, value, banks

Westamerica Bancorporation: This Shrinking Bank Is Too Expensive

Westamerica Bancorp (NASDAQ:WABC) is unusual as far as banks go; the company has good credit metrics: low levels of problem assets, good reserves, earnings that aren't dependent on reserve releases and deposits that don't pay a lot of interest, and even a pretty nice dividend yield. All-in-all it should be a great investment… but it's not. It's a very expensive investment whose significant price run-up, (recently trading around $56 a share from ~$42 at the start of the year), makes very little sense from a rational standpoint. In fact at these levels, the bank looks at least 25% overvalued and it appears to be a good long-term short candidate.

(click to enlarge)

Westamerica serves customers in northern and...

Join Seeking Alpha PRO to read this archived article and 11,574 other archived articles
FREESA PRO MEMBERS
IDEA GENERATORXExclusive access to 10 PRO ideas every day
INVESTING IDEAS LIBRARYXExclusive access to PRO library of more than 15,000 ideas
SECTOR EXPERT NETWORKXExclusive access to all sector experts for direct consultation
PERFORMANCE TRACKINGXTrack performance of all PRO stock ideas
PROFESSIONAL TOOLSXProfessional Idea Filters to zero-in based on industry, market cap and more
"In just the first month of using PRO, I used it to generate two ideas which were actionable for me. As a result of these two positions, I have earned more than 20 times the annual subscription costs for PRO."Michael Yagemann, Greenbridge Capital
"I am pleasantly surprised with the scope of small and mid-cap coverage PRO offers. You can't find that any where else."Patrick Rice, Mainstay Capital Management
You may cancel at any time for any reason, and receive a prompt refund for membership on months paid and not used (max. 6 months). Details