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I am a professional by day and an amateur investor by night. I have been investing since I was a teen and continue to thoroughly enjoy every minute of it!
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  • Cape Bancorp - CBNJ$ - A Community Bank To Add To Your Long Term Portfolio

    Cape Bancorp Inc. (CBNJ$) is a holding company that was founded in 1923. It operates Cape Bank which is a community bank primarily located in New Jersey. What was a community bank with approximately 13 branches is now a bank with 22 branches as of April 1, 2015, when it closed the acquisition of Colonial Bank (COBK$). Due to the acquisition it has doubled its assets to approximately $1.6B.

    Other than the said acquisition, what makes CBNJ attractive?

    First, its price-to-book ratio is very attractive at 0.71. The company currently trades at $9.40 compared to its book value of $13.16 and tangible book value of about $10.40.

    Second, CBNJ's price-to-earnings ratio is 15.41. Although this is not low (8-12), it is not high. Its P/E is at a reasonable level compared to its peers.

    Third, CBNJ has an attractive dividend which is .24 cents per share per annum. The current yield is 2.5%.

    Fourth, it is currently on its third buyback and has a low float of about 10M shares.

    Fifth, at the end of 2014, its percentage of non-performing assets was just above 1% which is very impressive. This level will likely increase following the acquisition of COBK.

    Sixth, CBNJ's Officers/Directors own approximately 26% of the shares outstanding. It is rare that management has such a stake in the company that they manage.

    Seventh, several activist investors also have a stake in the bank. Michael Price owns about 2.3%, Joseph Stilwell owns about 4.4%, and EJF Capital owns about 4.4%.

    Eighth, CBNJ's earnings are respectable but nothing to rave about. Since 2009 they have incurred a loss in only three quarters, however, their earnings have been hovering between 0.40-0.68 cents per share. Hopefully the acquisition of Colonial Bank will assist in accelerating forward earnings.

    I believe that this is a community bank that would make a good addition to a longterm portfolio. Given many of the above points, I also believe that CBNJ would make a good acquisition target.

    Apr 11 11:59 PM | Link | Comment!
  • GNW$ - Genworth Financial Appears To Have Bottomed And May Be Ready To Unlock Value

    I have been following GNW$ for some time now. I was a shareholder and sold my entire position at $18/share a while back as I had made a good return and did want to be greedy. Low and behold I was lucky to have dodged a significant bullet. Soon after selling my position, the company announced that they had under-reserved on their long term care portfolio.

    Let me explain this issue further as it could have been, and could still be, a fatal mistake for the company. The company's old long term care policies have turned out to be much more costly than the premiums being collected under those policies. This has resulted in significant losses which unfortunately has masked the positive results of the company's other units.

    GNW$ has quite a few hurdles at this point. First, its long term care unit is sustaining heavy losses as stated above. Second, its life division is showing mediocre performance. Third, interest rates remain low in many countries where it operates which has depressed interest income.

    So what are the positives, if any?

    The mortgage insurance units in Canada and Austrailia are still performing well. The parent company receives decent cash flow from these units. The US mortgage unit continues to improve which could result in higher cash flows and profits from the mortgage unit in the future. The company's debt to capital levels are in decent shape considering, standing at about 25%. Plus it has over $1 billion in cash.

    Should an investor consider making an entry at this point?

    The stock price has fallen from about $18 to about $8 because of the fears from the long term care unit. I have just read the recent conference call transcript. Management was very clear on the following points. They have completed a strategic review of long term care with the help of two outside independent actuarial firms. Write downs and further reserves have been put in place/incurred. They further indicated that they have and are reviewing all of their strategic options. They are thinking about paying down $1-2 billion in debt for strategic purposes as they may consider splitting the company. They may sell more of the Aussie mortgage unit, sell non-core businesses or place them into run off.

    Based on my reading of the conference call transcript, I get the feeling that if value is going to be unlocked it will come in the form of some of the strategic options mentioned above. For instance, the company could split into two, one company being the mortgage unit and one being the life unit. Its possible the rest is sold or placed into runoff. Such a scenario would certainly unlock some value as the mortgage unit would be able to then trade at its potential rather than be held down by the life unit.

    With that being said, I am not a magician. Its possible that management makes no moves or decides to issue shares which would dilute the shareholders. Although it should be noted that the company did state that they did not want to issue shares unless necessary.

    I believe that this company still has some serious issues to address. I also think that the shares should not go much lower than they are, especially if the company decides to make some strategic moves. I would be a CAUTIOUS buyer here. What I mean is that I would strongly consider building a small position here but would not be "betting the boat". Your small position could easily see gains of 50% or more should the company announce some positive news in the form of making some strategic moves.

    Feb 22 4:01 PM | Link | Comment!
  • SMMF$ - Summit Financial Group Inc.: A "Fixed" Community Bank On The Rise

    Summit Financial Group Inc. ("SMMF" - SMMF$) is a holding company for Summit Community Bank, a community bank founded in 1987. It currently operates 15 branches in Virginia and West Virginia.

    Before the "Great Recession", it paid a semi-annual dividend of .18 per share and, like most banks at the time, had a mortgage banking unit that took on more risk than it should have.

    During the next few years it, among other things, completely abolished its dividend, closed its mortgage banking business, reduced its expenses and reduced its troubled loans substantially. For instance, SMMF reduced its non-performing loans from 5.79% in 2009 to about 1.74% in 2014.

    SMMF now has a market cap of about $90M and about $1.44B in assets. Its price to earnings is very low at 9.83 and its stock price trades below book value. SMMF still does not pay a dividend, however, this may be a good thing for those investors looking for a catalyst as a dividend will surely be reinstituted at some point given its solid earnings growth.

    The two most impressive aspects of this bank are: (1) how it strengthened itself during the last recession by keeping expenses low and completely revamping the quality of its loans; and (2) how its earnings have been continuously increasing over the past few years. The growth in the earnings over the past 4 years, while the quality of its loans has been improving, is quite impressive!

    The following are SMMF's annual earnings since 2009:

    2009 - (.11)

    2010 - (.31)

    2011- .49

    2012 - .60

    2013 - .84

    2014 - 1.17

    It should also be noted that Castle Creek Capital, a fund company that specializes investing in community banks, has taken a 10% position in the company. This is not very important news but is certainly positive.

    By no way am I saying that this bank is one of my top 5 community banks. With that being said, if the stock price comes down to the $10-10.50 range I would strongly consider taking a position. I think management has got it right.

    Feb 14 10:25 PM | Link | 2 Comments
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