Banco Santander Puerto Rico (SBP)
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- General Discussion on SBP
- Are Bank Stocks Buyable? [view article]
- Investing in Colombia's Turnaround [view article]
- Prepare Yourself To Buy Financials [view article]
- Under The Radar News - Wednesday [view article]
- Eight Ways to Invest in the Thriving Commonwealth of Puerto Rico [view article]
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Are Bank Stocks Buyable? [view article]
Marc - If you're referring to chargeoffs when you discuss loan loss criteria, I agree with your logic completely. I pay much more attention to the level of non-performing assets than to chargeoffs, because I believe banks have less discretion in defining NPAs. ReplyAre Bank Stocks Buyable? [view article]
What is the point in owning any bank stocks? Do we have to try to pick an absolute bottom to make money in the long term. Most banks are a black holes of financial nonsense. Nobody really knows what they are worth. I do know that lots of pay option ARMs are going to be adjusting in 2009, 2010 and 2011. So there is no rush to own this toxic waste. ReplyAre Bank Stocks Buyable? [view article]
A large part of my bearish sentiment stems from the systemic deterioration of underwriting standards in the mortgage and commercial loan markets. Standards were relaxed on all programs including prime and AAA commercial credit. I believe that the true scope of the consequences of radically relaxing loan standards right before the economy heads into an average to severe recession will have. In my opinion default predictions for prime, prime jumbo, auto and credit card loans as well as small business loans, construction loans, and floating rate debt held by large corporations are still too low. From first hand experience I can tell you that a significant portion (greater than 20%) of mortgages underwritten and purchased by the GSEs would not have passed muster under any other period and is far from prime quality. While I agree that the more conservative banks stand to profit handsomely with the elimination of overly aggressive competitors and the availability of prime assets which would otherwise never be for sale at discounted prices. At the same time I feel that the credit contraction is only starting in earnest. The issue holding back a more expedient end to the necessary contraction is the low quality and illiquid nature of the assets which need to be liquidated off of bank and other financial companies' balance sheets. Because there are no willing buyers for the fixed income exotica created over the last four years it is incredibly difficult for institutions to fully clean out their balance sheets. Until we see some stable pricing and a slight increase in the number of large distressed debt deals in order to be able to ascertain the eventual trading prices of these massive piles of securities which will ultimately reveal the state of many banks real balance sheet health. Another key factor is the fact that there is no real way to at this point accurately predict where the unemployment rate and the housing drop will end. Until such data becomes a reasonable topic of discussion I feel that it is entirely premature to look for investment opportunities in the banking sector as the outcome of these macro events make such an investment perilously close to a roll of the dice. ReplyGerstein
Are Bank Stocks Buyable? [view article]
I get a sense the market is more or less tuned into credit cards and the employment issue. But the care leases and pay option ARMs still seem to have the potential to surprise. And outside the strict confines of banking per se, people (other than sell side analysts) had been worrying about Lehman and that shoe fell hard. Bear is gone. Now . . . are there any more to surface? So it seems unsurprising that that the banks stocks that bounced most were the most conservative, the type least likely to carry a sustained rally.BTW... the reason I didn't use valuation or loan loss criteria is because right now, I'm not comfortable with the #s. Good loan loss #s may mean good lending habits, or it may mean that they haven't yet ... but will soon .. take the big charges. That would also play havoc with the valuation, metrics. Down the road, once life normalizes (however long that may take), valuation and loan criteria would definitely be important. Reply
Are Bank Stocks Buyable? [view article]
I am very bearish on bank stocks but do agree that these are good screening criteria. There are still four major factors which are likely to mean more trouble for banks.The first is the negative equity in car leases. All truck and many car and luxury car leases written in the last three to four years have residual values significantly above the current market value of the vehicles, in many cases the difference exceeds $10,000 per vehicle (take a look at the prices of used luxury cars and mid size and full size trucks right now and compare them to what they were a year ago for vehicles of similar age and mileage, the difference is shocking) which is a tremendous hit to the institution which must take back and sell the vehicle.
The second issue is the upcoming recast of billions of dollars worth of Pay Option ARMs. These exotic mortgages allow borrowers to pay less than the interest due while growing the balance to a cap of 110%, 115% or in some cases an insane 125% of the original balance. When this cap is reached the payments more than double. Most of these loans were done with no documentation of income and are therefore as toxic as the subprime loans. This will add more foreclosure inventory to the already weak housing market and will severely punish those banks which hold these loans on their balance sheets. The biggest holder of these loans is WB with over $120B in their portfolio.
The third issue standing in the way in the way of a banking recovery is the performance of credit card debt. Because consumers used their home equity lines to pay down their credit card debt during the housing boom/bubble they have found themselves with one last avenue of available credit. Defaults in the credit card portfolios of COF and AXP have accelerated and in my opinion will continue to do so as cash strapped consumers use the credit cards to continue to fund purchases which they cannot afford. At this point these purchases are no longer limited to lifestyle desires such as eating out or new luxury goods but now include the increasingly expensive price tag of groceries and gasoline.
The fourth and final issue is the rising rate of unemployment. Increased unemployment means increased levels of default across all classes of consumer loans, and at some point begins to seep into commercial lending as a slowdown of consumer spending hurts small businesses. The continued rise in unemployment numbers and the acceleration of this trend does not bode well for the banking industry.
As I said before while I fully agree with the authors methodology I still believe that looking into bank stocks is premature at this point and will continue to be premature until a bottom is found in the housing market and a top has been reached in the accelerating unemployment statistics. Reply
Are Bank Stocks Buyable? [view article]
No valuation criteria, e.g. P/B.... ReplyAre Bank Stocks Buyable? [view article]
The list of criteria looks good, but I believe it needs an addition that reflects the level of non-performing assets and the adequacy of the loan loss reserve. ReplyInvesting in Colombia's Turnaround [view article]
good article. Thank you for sharing. I do know that Colombians, as a people, are some of the most resilient and persevering i've seeen (like the Lebanese, for instance); so, though the country is fraught with profound dilemmas, i have a feeling they will emerge from their multi-decade decline. Thanks again. ReplyInvesting in Colombia's Turnaround [view article]
After some years of watching Colombia (I am married to a Colombian woman), I can tell you first hand that the business climate is improving. This comes from real grass roots input, the many business owners in her family. And, I would agree thatCIB is a good way to take part in an improving political situation and a growing economy.Disclosure: I am long CIB and have been for 5 years when it was below $10. Reply
Lutz
Investing in Colombia's Turnaround [view article]
Great Article: I guess the recently rescued hostages will definitely help the situation as well. It seems that Columbia is also natural research rich. I still believe the security issues are a little disconcerting. After all, if you invest in a company and the CEO gets kidnapped...well, the stock will drop 30 percent on the news.I wouldn't mind investing in a columbia ETF if one were to become available. Like you said in the article though, there really isn't one available, sadly. Reply
Prepare Yourself To Buy Financials [view article]
So which banks do you favor now? ReplyEditors
General Discussion on SBP
Is this a buy or a sell? ReplyUnder The Radar News - Wednesday [view article]
Hey Look OKlahoma almost made the record of Child Deaths!!!Report: 'Life And Death' Differences in U.S. Child Well-Being Exist
Between Top and Bottom States, Youths Up to Three Times More Likely
to Die Before
Based on a wide cross-section of 10 major child well-being standards,
the 10 bottom states identified in the Every Child Matters Education
Fund report are: Arizona (41); South Dakota (42); Nevada (43); Arkansas
(44); South Carolina (45); Texas (46); Oklahoma (47); New Mexico (48);
Mississippi (49); and Louisiana (50). The 10 top states for children
by the same measures are: Maine (10); Washington (9); Minnesota (8);
Iowa (7); Hawaii (6); New Hampshire (5); Rhode Island (4); Connecticut
(3); Massachusetts (2); Vermont (1).
news.yahoo.com/s/usnw/...
Reply
Under The Radar News - Wednesday [view article]
Finger pointing - A show of self athority - To be-littling others - A Parental shame Mechanism - Put on children - To shame children into submitting.Finger Pointing - The art of making a situation - You have done - Projected onto others.
Simple example - I Have just lied - a child questions that LIE - and I start shaking my finger - and pointing back at that child - and say things that be-littles that child - and try to produce shame - into that child - that brings out a memory of when that child lied about something - Then no one is looking at my LIE any more.
Look at how it has worked - Iraq - when someone mentioned a lie - they rushed out - and put shame back onto others - There un-patriotic - they love the terro's.
Look at the sub-prime mess - Ohhh they bought house's they couldn't afford - but wait they were paying for those house's - until we raised the interest rate on them - but we had sold those higher - mortages already - so ohhh well - they bought house's they couldn't afford.
The simple finger pointing - rule of law - it's never my fault - I'm not responsible for my-self !!!!! Reply
Prepare Yourself To Buy Financials [view article]
A what about Corus Bankshares CORS seekingalpha.com/symbo... Reply