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BGC Partners: An 'Otis Redding' Investment And Why I Shy Away From Major Banks

Feb. 11, 2019 12:49 AM ETBGC Partners, Inc. (BGCP)NMRK, RWW44 Comments
George Fisher profile picture
George Fisher


  • Traditional banks are at risk of being disrupted, and not in a good way. There are undercurrents of troubles that cause me to shy away from major banks.
  • Fintech and niche financial firms are preferred investments to major banks.
  • BGC Partners is a building unique, employee-concentric business using its shares as a compensation tool.
  • If 2019 EPS is $0.70, 12x PE equals a 40% gain, plus a 9.3% qualified yield.  BGCP should be attractive to income and capital gain investors.

Otis Redding (1947-1967), also known by some as the King of Soul, is an icon of the 1960s musical era. One of my favorites is a 1965 writing collaboration with Jimmy Butler, “Been Lovin’ You Too Long To Stop Now” and reminds me of my selection of BGC Partners (NASDAQ:BGCP) as a major investment in the financial sector.

It is important to acknowledge that I believe the best place for investment dollars in the financial sector is not in the traditional banking sector. I own investment bankers, insurance firms, private equity firms, niche financial services providers, and Oppenheimer Financials Sector Revenue ETF (RWW), a financial sector revenue-based ETF leveraged to insurance over banking stocks. While my personal equity portfolio exposure to the financial sector is 13%, vs 16% for the S&P 500, less than 1% is invested in major money center banks.

Source: digitalcenter.com

As a strategic allocation decision, my subdued banking exposure is from a belief that traditional, major banks could be subjected to severe disruption, and not in a good way. Within business development, there are disruptors, those that disrupt the status quo, and disruptees, those that get disrupted as they are the status quo. Banking firms are ripe for being considered as distrupees. As investors know, being a distrupee is not necessarily good for business. While some US investors could phoo-phoo this risk as not being relevant in this bull market, an ostrich approach is not conducive to uncovering Alpha opportunities.

Janus Henderson Investors, in an article published earlier this month, outlined several investment themes for 2019, especially in Europe. John Bennett, Director of European Equities, Janus Henderson, is quite vocal of his belief that fintech, or financial technology, will be the great disruptor with traditional banks being vulnerable to a substantial slide in business.

Fintech is

This article was written by

George Fisher profile picture
I am the author of Guiding Mast Investments monthly newsletter, focused on timely dividend paying stocks. Our mission at Guiding Mast Investments is to help investors keep a steady pace of wealth accumulation as they navigate through their financial voyage.  I have been a Registered Investment Advisor, financial author, and entrepreneur. I bring a variety of expertise to my clients, from personal investment planning and management to stock market analysis skills. I am the creator of the late 1990s investment newsletter Power Investing with DRIPs focused on timely selections of dividend paying stocks. I have also published two books through McGraw Hill, All About DRIPs and DSPs (2001), and The StreetSmart Guide to Overlooked Stocks (2002). My work experience covers a variety of fields.Prior to being a RIA, I spent 15 years as a corporate manager at Georgia-Pacific Corp before venturing out on my own, operating several businesses from manufacturing to export marketing management. President Ronald Reagan appointed me to the National Advisory Council overseeing the Small Business Administration from 1988 to 1991. Now comes the obligatory disclaimers: The opinions and any recommendations expressed in this commentary are those of the author . None of the information or opinions expressed in this article constitutes a solicitation for the purchase or sale of any security or other instrument. Nothing in this commentary constitutes investment advice and any recommendations that may be contained herein have not been based upon a consideration of the investment objectives, financial situation or particular needs of any specific recipient. Any purchase or sale activity in any securities or other instrument should be based upon your own analysis and conclusions. Past performance is not indicative of future results. The information contained in this report does not purport to be a complete description of the securities market, or developments referred to in this material. The information has been obtained from sources considered to be reliable, but we do not guarantee that the foregoing material is accurate or complete. Any information is not a complete summary or statement of all available data necessary for making an investment decision and does not constitute a recommendation. Expressions of opinion are as of this date and subject to change without notice. Either Mr. Fisher or his employer, if any, may hold or control long or short positions in the securities or instruments mentioned.

Analyst’s Disclosure: I am/we are long BGCP, NMRK, RWW. I wrote this article myself, and it expresses my own opinions. I am not receiving compensation for it (other than from Seeking Alpha). I have no business relationship with any company whose stock is mentioned in this article.

Seeking Alpha's Disclosure: Past performance is no guarantee of future results. No recommendation or advice is being given as to whether any investment is suitable for a particular investor. Any views or opinions expressed above may not reflect those of Seeking Alpha as a whole. Seeking Alpha is not a licensed securities dealer, broker or US investment adviser or investment bank. Our analysts are third party authors that include both professional investors and individual investors who may not be licensed or certified by any institute or regulatory body.

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