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People's United Financial Inc. Message Board

  • jimgerber816 jimgerber816 Mar 26, 2007 2:20 PM Flag

    Why PCBT is a buy here

    #1) for starters I was so thrilled to see all the basher posts here. The fact that the bashers are doing everything they can to talk everyone out of doing this conversion is a huge sign of how successful it will be. Since the deal is structured so that the more undersubscribed it is the higher the conversion price will be, those who are long have a vested interest in scaring off as many potential investors as possible.Thus we probably got more than a few paid bassers here from those firms that specialize in doing that activity.

    #2) About 95% of all ocnversions make money. No one is making enuf positve noise bout the hidden value cause of the accounting rules of how depositor money is valued that makes conversion instantly more valuable post conversion.

    The last one i was aware of in Connecticut was AMFH American Financial that converted at $10 and was over $20 within weeks of the conversion. Was eventually bought out over $30 and my Filipino Girlfriend now drives the profits from that trade in a shiny Red fully decked out Dadge Caravan.

    #3) Peolples post conversion will be a huge attractive take over target for any New York or regional bank that wants to expand into Connecticut. I personally think that the reason for this conversion is because People's knows it will get a higher bid as a regular stock then as currently organized.


    #4) Despite all the lies and innuendos being spread by the bashers the truth is that Peoples is a relatively Clean bank meaning it does normal banking activity and not highly risky lending. It has lots of regular mortgages, business loans and of course regular depositors. It si not the type of bank that develops problems to easily psot conversion and therefor should see the normal conversion premiums.


    I checked my account and know that my check to cover 3000 shares was cashed and I can not wait til next Monday. I am hoping that the stock moves over $30 with in a few weeks of conversion, doubles with-in a few months and get a takover bid north of $50 by the end of this year.

    Do not be too quick to sell. I think this is asituation where the longer you hold the more money you make.

    Wizetrader Jim

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    • Deal is done..Ryan Beck said the syndication was closed when a buddy called end of day today. Makes sense since they said they were going to finish it on Monday April 9. Plus they need to get it buttoned up before they disclose 1st qtr financials which should be the third week in April. They know how much they sold and it looks like the market did as well. Conversion ratio makes the existing stock worth between $39.32 and $45.22 tomorrow. Too rich for me but you can never underestimate when money moves.

      Curious to see how much patience some of these investors have. Stock might hold up around $20- $21.5 until the massses get their paper certificates during the first week. Doubt that it will hold up after. Some irrational expectations of another NAL will be quickly snuffed and then there will be the first quarter earnings. Curious as to loan loss reserves in the first quarter numbers..

      Oh well didn't think they could sell this bloated baby past the minimum..guess I was wrong

    • between midpoint & maximum

      There went the safety margin. Buyers in the offering will be lucky to get a 3% pop. Probably be lucky if it holds $20 throught the year as we see continued meltdowns in housing & subprime lending. YES, PBCT may not have a subprime program, but this will hurt all lenders to some degree. As more homes come on the market due to the subprime fallout, housing prices will fall (supply/demand), that will hurt everyone. Slowdowns in loan growth. They will also make a dilutive acquisition.

      Greedy management and underwriters selling to buyers who don't understand what they are buying. I thought they would have trouble finding that many uninformed syndicate buyers.

    • moron,you think you are smarter thn all the pros who took a pass on this overpriced poc

    • Hey Jim, Glad you had a safe and fun trip.

      We each have our opinions and will have to agree to disagree until the new stock starts trading. You are exactly right on the fact that demand will be lower because they opened this up to everyone, with very high limits, no doubt so they can try to sell more stock in the offering. I think everyone knew they would open the offering up to the syndicate because there was no way that depositors could order enough stock to do the deal.

      On your open price, maybe if they only sold to minimum it might get to $23, but I don't think the greed of the underwriters & management will let them stop that low. I am hearing midpoint, maybe higher. At midpoint this has at most 3-8% in it day one. Stock might trade to $23 in the next year, if they go to midpoint.

      I hope you get lucky and they only get orders for minimum.

      Like you I take what I post seriously too.

    • Thank you for the kind words.

      Florida trip was great. Nothing like Fun Sun And Golf to recharge the old batteries.

      We should learn more tommorrow at the big meeting. I still think that the new stock will see $30 with-in a few months. I have downshifted my intial trading expectations slightly because the fact that the company had to open up the deal to reach the minimum left fewer buyers to cause a pop st the open. We will still go up at the open but not by as much as I first thought. If i was to guess I will say we go to $23-$25 by end of first day of trading.

      Not being negative just being realistic. I am one of the rare internet stock message board posters who actually takes what he writes seriously.

      Sure I sometimes get pissed off and pissed on but I will stand by the overall body of my posting work with pride.

      Wizetrader Jim

    • Nice post..I am of the opinion that they could road show it all they want. These are tough times to raise $3.5B at an inflated price. I bet the fundamentals will win out this time despite the power of moving money. My bet is that they don't raise the midpoint, maybe significantly less. Curious as to what was bought by depositors, but I guess we will find out soon enough.

      As for NAL. Made a killing selling at $15.50 at 11:30 the morning it opened, then hopped on a plane to the final four...ah sweet weekend...Haven't even looked at it since.

      She will sell that bank soon enough. That is what she took the job for. Problem is that she paid a high price to leverage the capital and the earnings are still lousy. Coupled with a little tightening on takeover prices and I don't want to make that bet just yet. Not enough reward.

      Forget it if you think People's is going to do a deal with NAL..no synergy..no new markets..antitrust issue's...not happening. and if it does it will take forever for them to make any money...besides it would have happened already.

    • PBCT -- attractive price-to-tangible-book ratio.

      At the offering price of $20 per share, PBCT will trade at a worst-case ratio of 150%.

      Its peer-group median is 250%.

      • 1 Reply to no_slappz
      • no slappz,

        The price to book ratio is only a symptom of prices paid for banks and not a driver of bank valuation. Such a ratio is only helpful when you are comparing oranges to oranges, and PBCT is a not an orange due to the excessive, over 30% at midpoint, capital ratio it will have post conversion. In any basic finance class you learn that valuation of anything is driven off of the cashflow you can obtain off of the asset, and bank valuation is no different. Not a single bank in the 250% P/B group you speak of has a capital ratio approaching PCBT's bloated capital ratio. But fear not, PBCT management will do an overpriced acquisition soon to lower the capital ratio, of course it won't add value to PBCT, probably detract from it.

        Here are some numbers to back up what I am saying:

        If regulators allowed, which they won't, PBCT could pay out $3,240,000,000 in capital after the offering and have a capital ratio of just over 8%, and be well capitalized according to regulatory guidelines.

        Paid to shareholders of Peoples United the excess capital payout would be $11.92 per share, and one would expect the stock at $20 to decline to $8.08. After this payout the tangible book value per share would fall to $3.12, giving us a price to book ratio of 259% ($8.08 divided by $3.12). Yes, PBCT stock will effectively trade at over 250% of book at $20 per share due to the massive overcapitalization of the company.

        You're welcome.

    • You are out of your mind if you think PBCT will get a $50 offer by year end.

      AMFH was a great little bank. I always thought they should have merged with SBM instead of selling out to Banknorth so quickly.

      Did your Filipino girlfriend work in the Mortgage Dept?

      I decided to pass on this deal as I see better value elsewhere.

      I will keep a close eye on PBCT as they will be bought out in 3-5 years, no doubt about it!

      Take care,
      Fin

      • 1 Reply to finsvcspro
      • Hey

        I call em as I see Em.

        If I am wrong I will sell out early.

        I still claim that everyone here is missing the big picture. You can talk numbers and ratios all day long but reality to me is simply this.

        The accounting magic I am talking about is true. When banks convert from depsoitor owned to stock owned they become more valuable.

        I went hunting today for some link to prove this but was not able to find it in a brief search. Will try more later.

        Secondlt Peoples is a stable well run bank in a very desirable market. This is not the type of bank that gets in trouble too easily and it has been and will continue to be an attractive stock plus a likely take over target.

        Because of the first two pints i personally call the chances of actually losing money on this deal at 2%. The biggst risks are market ones. Like the stock Converting on the day that the Iran situation explodes and the market tanks.

        Given a normal market on the day this conversion trades and in the next couple of weeks to follow, THis stock will simply trade higher.

        If I am wrong you can rest assured that i will be taking a bath on this trade but I will not change my mond on this till proven wrong.

        Wizetrader Jim

        PS If anyone out there can confirm or support me on this please come out and help me. I may or may not "Be Smarter than a Fifth Grader" but defending this conversion here makes me feel like "1 VS 100" LOL LOL LOL

    • Jim, you need to learn more about investing.

      AMFH and PCBT are not remotely similar. Look at the ratios on both offerings and you may understand what I am talking about.

      The Syndicate will set the final price, bashers aren't going to matter one iota concerning the level of stock sold.

      This isn't like 95% of conversions, it is the most overpriced conversion in history. There is no secret accounting method that makes this company worth more. The deposits will have a 20%+ valuation built into the $20 price, this translates into no excess value due to the deposits, since it is already valued, understand?? You honestly think it will go to $50 by the end of the year? Wish I had what you are smoking. It will NEVER see $50, promise. You will be lucky to see $30 in a takout in over three years, but I doubt it.


      PBCT can't sell as it is currently organized, of course they need to convert. It can't be sold for three years, it will make dilutive acquisitions that won't add to shareholder value. You want to see another stock that did a 2nd step and was a better value, look at the 5 year chart on PRTR! This is all you can hope Peoples United will do.

    • I think it's a good deal also. However I won't read anything into them cashing your check already. The information that they sent said they would cash all checks as soon as they were received and pay you interest on it until they actually bought the shares. I think they said they would pay the saving book rate which is only 1/2 percent.

 
PBCT
14.83-0.05(-0.34%)Jul 22 4:00 PMEDT

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