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.

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Westamerica serves customers in northern and...

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