Alpha Bank: One To Buy Before November 4

Oct. 27, 2014 3:17 PM ETALBKY
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Long/Short Equity, Value, Deep Value, Short-Term Horizon

Contributor Since 2014

I am a bona-fide value investor looking for opportunities that are fat pitches. Nothing too technical or out of the circle of competence. Always looking to expand the circle of competence within reason. Read everyday. Compound your knowledge.


  • Alpha Bank just passed ECB stress testing.
  • Two other Greek banks failed the ECB stress testing, including Alpha Bank's largest competitor, National Bank of Greece (NBG).
  • Alpha Bank is set to announce financial results on November 4.

Alpha Bank (OTCPK:ALBKY) has been trading low as of late, touching .17 price per share. Since touching .17, the ADR has returned back to a more comfortable .214. This price level has been the norm for months now. The drop and return in price was just last week, so what can one expect heading onward towards 2015?

What's different now?

Alpha Bank reportedly had passed the ECB stress testing, according to two sources related to the issue at-hand. Spanish media had Alpha Bank pegged as one of the failing banks. That uncertainty can be tossed now that the results have been announced.

Why watch?

Alpha Bank passed the ECB stress testing, which did not consider it's restructuring plan. Also, the acquisition of the Citigroup retail banking division in Greece will help boost the financial results as the Greek economy continues to rise from recession.

Another note is that Alpha Bank struck a deal with Chinese company, Union. Their alliance signals that China has confidence in allying with Alpha Bank over other Greek, and even other European, lenders.

The financial results on November 4 are one thing that could increase the price per share or undermine it. Given recent results and the fact that the ECB stress tests results were based on static balance sheet financial data, Alpha Bank will likely come out ahead.

The results of the ECB stress tests, creating new Alpha Bank holders, and the results to be announced on November 4, which will include recent restructuring plans not included in the ECB stress tests, could ultimately lift Alpha Bank much higher.

Given past results from positive test conclusions and news events, a price target would conservatively be placed at .35 per share. That provides, based on recent prices, an approximate 63% return.

To reiterate, Alpha Bank is well capitalized. It will not require any further share dilution, or capital raising. My advice would be to hold for the mid-to-long term of 3-5 years to really reap the benefits of this Greek recovery play. Its price to sales and price to book, as well as price to earnings, added to growth prospects for a revitalization in the Greek economy make it a select growth and value ADR.

Disclosure: The author is long ALBKY.

The author wrote this article themselves, and it expresses their own opinions. The author is not receiving compensation for it (other than from Seeking Alpha). The author has no business relationship with any company whose stock is mentioned in this article.

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