Bank stock investors have seen their investments soar during the past six weeks. The percentage gains in bank stocks have dwarfed all general market indices.

Citicorp (C) stock rose from the ashes of $0.97 per share on March 5th to an inter-day high of $4.48 on April 14, 2009. During relatively the same period, Bank of America (BAC) rose from its all-time low of $2.53 to $11.58; J P Morgan (JPM) rose from $14.96 to $33.70; Wells Fargo (WFC) rose from $7.80 to $19.67, and US Bancorp (USB) rose from $8.06 to $18.01.

Remarks by Federal Reserve Board Chairman Ben Bernanke allayed fears of the federal government nationalizing major banks. Appearing before the House Financial Services Committee, Bernanke said the major banks were not in jeopardy of failing and nationalization was not necessary.

Bernanke stated that nationalization is when the government seizes the bank, zeros out the shareholders, and manages the bank. He said the government doesn't have anything like that planned. His remarks caused a significant rally in beaten down bank stocks.

US Bancorp (USB) has been one of Warren Buffett’s favorite stocks. However, in the fourth quarter of 2008 he reduced Berkshire Hathaway’s (BRK.A) holdings by 5,385,700 shares or 7.38%. It was one of the few stock positions he reduced during the fourth quarter. Prior to those sales he owned 72,937,126 common shares of USB and that represented 4.1% of USB shares outstanding.

The price of USB shares on September 30, 2008 was $36.02 and the value of BRK’s holdings was $2,627,194,000. By December 31, 2008 USB had fallen to $25.01, a decline of 30.57%. The total value of the USB shares not sold during the quarter therefore declined by $743,741,200.

In his recent appearance before the House Financial Services Committee, John Stumpf, President and CEO of Wells Fargo & Company (WFC), stated “We are a community bank.” In effect his statement was designed to create the impression that Wells Fargo was in much better shape than other large banks and not burdened by toxic assets. He specifically mentioned that he spent his career living and working in different cities and states implying that Wells Fargo’s closeness with customers enables them to make better loans.

His views are understandable given the storied pasts of Wells Fargo and Norwest Corporation prior to their merger in 1998. At the time of that merger Norwest was composed of 37 subsidiary banks located in 16 states with 930 locations, while Wells Fargo was a single bank with many branches in communities throughout California.

On December 11, 1930 the Bank of United States failed setting off runs on numerous other banks that had refused to come to its aid. It was only one of the 352 banks that failed that month but its failure had worldwide repercussions, because many thought it was owned by the federal government. It was actually a relatively small state-chartered bank with slightly over $200 million in deposits located in New York City. But - it had an imposing name!

In the aftermath of that confidence shattering failure it was determined that no newly chartered bank would be allowed to use “United States” in its name. Of course that did not affect the Bank of America (BAC), which was already operating under that name.

The clamor for nationalizing big banks grows each day. Those favoring nationalization recommend removing all bad assets from bank balance sheets thereby wiping out, as needed, the equity of common shareholders followed by the interests of preferred stockholders and then the bond owners.

The bad assets would then become assets of the FDIC or a special entity established by the federal government. The new owners could then keep them or sell them to private investors, who are reportedly waiting anxiously to acquire these bad assets.

President Obama’s election campaign focused on change he would bring that would turn around the economy. The team of economic advisers he introduced only days after his election testified to the priority he intended to give to the economy. Paul Volcker, the former Federal Reserve Board Chairman, lent great credibility as the head of that advisory group and expectations for an economic recovery began to spread.

The hope for a reversal of economic fortunes began to unravel with Obama’s controversial selection of Timothy Geithner as Secretary of the Treasury. It was eroded further by reports that Larry Summers, the head of the National Economic Council, was giving a cold shoulder to Volcker and assuming dictatorial power over economic matters.

The recent vote by Federal Reserve Board Governor Elizabeth Duke opposing the application of GMAC LLC (GMA) to become a bank holding company deserves high praise. The only reason GMAC, CIT Group (CIT), American Express (AXP), Discover Financial (DFS), Goldman Sachs (GS), and Morgan Stanley (MS) decided to become bank holding companies was because that was the only goofy way former Secretary of the Treasury Henry Paulson figured non-bank firms could access TARP funds.

No CEO in their right mind would knowingly reorganize their company so it could be regulated by the Federal Reserve. Just what they needed – another regulator looking over their shoulder!

Volatility in the price of bank stocks returned last week with renewed vigor as bears and bulls clashed over the Obama administration’s failure to release its bank rescue plan. Rumors regarding imminent nationalization focused especially on Citigroup (C) and Bank of America (BAC) and caused those stocks to plummet on Thursday morning. Citigroup traded as low as $3.20, which was still above its $2.80 low of January 20th.

BAC, however, was really taken to the woodshed and collapsed to $3.77, which was a 27 year low. The last time Bank of America stock was this low was 1982. At that time it was known as North Carolina National Bank and at the end of 1982 it only owned three small banks (all in Florida) outside its home state. Those current and past executives who have followed a buy and hold strategy have watched their net worth disappear along with the price of BAC stock.

Someone needs to school Citigroup (C) CEO Vikram Pandit on how to properly answer tough questions. He missed a wonderful opportunity on January 27th to dispel rumors of Citigroup’s nationalization during and after his formal address at Citi's 2009 Financial Services Conference.

He did not address the subject of nationalization in his speech. Then, in the Q & A session following his presentation, he was pointedly asked what was the possibility of Citigroup being nationalized.

Volatility in the price of bank stocks returned last week with renewed vigor as bears and bulls clashed over the Obama administration’s failure to release its bank rescue plan. Rumors regarding imminent nationalization focused especially on Citigroup (C) and Bank of America (BAC) and caused those stocks to plummet on Thursday morning. Citigroup traded as low as $3.20, which was still above its $2.80 low of January 20th. BAC, however, was really taken to the woodshed and collapsed to $3.77, which was a 25 year low.

Members of the Obama administration must have been watching the deterioration, because news began to leak regarding the forthcoming bank plan. The leaks were all attributed to unidentified sources close to the discussions and revealed that this administration was not hell-bent on destroying the last remnants of common equity in the large banks.

Nintendo (NTDOY.PK) shareholders are skittishly awaiting tomorrow’s scheduled earnings forecast. On August 29th the company raised its forecast fiscal 2009 sales by 11.1% and its net income by 26.2%.

A large part of the forecast growth in net income occurred because Nintendo management revised expected exchange rates to 105 yen per U.S. dollar from 100 and to 160 yen per euro from 155. As of today the actual rates are 97 yen per dollar and 125 yen per euro.

It is time for Nintendo of Japan to address the weakening price of its shares by taking meaningful action. Its stock price closed at 48,700 yen on August 19, 2008, representing a decline of 33.5% from its November 1, 2007 peak of 73,200 yen and just slightly above its 2008 low of 45,600 yen. While some of the decline in its stock price is attributable to general market weakness, fear of recession, a strong yen, Wii supply shortages, topping out of sales of the DS, and game console price cuts by Microsoft (MSFT) and Sony (SNE), the fact is that Nintendo (NTDOY.PK) management has done nothing to curb the decline in its stock price.

The market value of Nintendo has fallen from a peak of about $85 billion to about $56.6 billion, a decline of $28.4 billion. It is now trading at a PE multiple of 19.2, a PEG ratio of 0.57, and a dividend yield of 2.6% based on its forecasted net income per share for its fiscal year ending March 31, 2008.

In October of 2005, 2006, and 2007 Nintendo (NTDOY.PK) announced upward revisions of their forecasted respective fiscal year ending March 2006, 2007, and 2008 earnings and dividends. Its October 2006 modification was followed by further upward revisions issued on January 10, 2007. No such upward modification announcement was made in January of 2006.

Investors looking for a revised forecast of earnings and dividends by Nintendo need to focus their attention on a possible announcement by the company around January 10, 2008. A failure to announce upward modifications would likely cause a cool response and disappointment from Nintendo stockowners who have grown accustomed to seeing long lines of Wii buyers being unable to buy the console.

Nintendo’s failure to anticipate the demand for the Wii and its inability to ramp-up production are seriously restraining its growth. Furthermore, Wii console shortages have encouraged Microsoft and Sony to slash Xbox and PS3 prices and capture many would be Wii buyers.

Unit sales for the Wii revealed in the October 25, 2007, Nintendo earnings release show Wii sales of 1.143 million per month for the quarter ended April 30th, 1.3 million per month for the quarter ended September 30th, and expected sales of 1.695 million per month for the six months ending March 31, 2008. While these numbers show increased production, they fall far short of meeting actual demand.

Nintendo’s (NTDOY.PK) rumored problem ramping-up production of the Wii console and the company’s failure to comment casts a cloud over the near term outlook for its common stock. That outlook is further clouded by the weakness of the dollar.

In its last forecast dated July 25, 2007, Nintendo modified its projected fiscal 2008 earnings to reflect sales of 16.5 million Wii units, which was up from the 14 million units forecast in its April 26, 2007 release. At the same time, it revised its earnings to reflect an exchange rate of 118 yen per U.S. dollar versus its previous forecast of 115.

Treasury Stock

Nintendo has authorization to issue 400 million shares. Of those shares, 127,903,013 were outstanding on March 31, 2007.

Size

The following list shows the most recent three years of video game revenue for 24 leading, publicly-traded companies in the video game industry. These better-known companies, whose common stocks are listed on various stock exchanges throughout the world, probably account for at least 90% of the worldwide sales in the video game industry. With the exception of Sony (SNE), Microsoft (MSFT), Disney (DIS), and Logitech (LOGI), most of the other companies listed derive almost 100% of their income from the video game business.