I thought with FITB being on fire RF would pop today. With a basically double loss in the quarter Rf may take at least a 25% downward move. Take the $4 Rf likes to sit at and take the 25% off and you get $3 a share. Three looks like my new target buy in spot.
True on the short term.
Long term and OUTSIDE ( NON AL takeover ) that moves the HQ OUT OF AL with Ritter and CO fired.
Will send RF to 8.00 a share. It is clear that the stock is trading at a heavy discount for the Ritter factor. A buyout that dumps him and Co will be huge.
This ship has a pretty strong hull, it is well capitalized and has big loss reserves now.
The originator REITs and the banks who bought big into their junk loans for top dollar are the ones that hit the iceberg. In case you didn´t notice they all got sunk for it. They were on a drunken binge heading into a sea of icebergs, the longer they stayed afloat the more billions we all would end up paying, their lending was so bad.
Banks like this are not pretty, but I think the ponzis are pretty much washed out, as are the weaker consumer and business loans.
Florida may hurt it for quite some time, and it isn´t a triple hulled yacht, but hey, at fire sale prices I at least am holding.
Good question, who cares. I look for opportunities, I think this is one, and the market changes.
The reasons this one is down include several that support a buy here for longs who like these kinds of plays, though, IMHO.
One, managment lost credibility on the way down. Back in the teens they said blah blah blah we are a conservative bank and we don´t do subprime so we arent desparate like the others, which is understandable but in hindsight not such a good move. Both management and investors both got hit with the hard reality that when ponzis run amok the whole financial sector will hurt hard for it and the losses blindsided them. So investors don´t trust them for it. That gives the stock a bit of a hangover.
Two, an analyst went overboard on this one before this earnings release, soapbox analysis, IMHO, sky is falling chicken little call, saying it would be an absolute disaster. It was not, but there are still investors and shorts who want to believe it trying to paint a bull into a pig with broken legs which it isn´t. This bull has a heavy weight on its back, no doubt, but its legs, the underlying business and business model, are solid. In fact, banks like this are positioned well because this round we will probably not return to the ponzi lending schemes.
Three, the financial press went into this earnings release bashing at will, they were decidely negative saying that the banks would have disastrous earnings. They look stupid for it, IMHO, to me they looked dumb befort that in calling for nationalization when the banks had done a whole lot to right their ships. They like to kick bulls when they are down in the two bit rodeo shows, but they had not even acknowledged all the good things that had been done to fix it. With that as a backdrop, this time, going into earnings, they thought they could make up for it with an easy bash, and again they failed to do their homework. They now try to paint positive news as bad, of course, and some investors stay on the sidelines for it, but it is kind of like a Fudd hangover.
They got drunk on loose lending, the ones that tanked, the ones who drank the poison hooch of subprime, Alt A and liar loans from the con artist originator REITs all croaked already. The others fell off the cliff and hit the rocks below with a big hangover. They are diluted, they lost a lot of blood, they are battered and bruised, but the bulls are getting up on their own legs and so I am buying. Sometimes folks do their best work when they are hungover. And there are few signs that this one is still drunk, and I do not believe it is taking even a nip of hooch to straignten itself out.
Just back to sound lending practices.
That is my take too. I think Florida may be a serious hangover for some time because of the overbuilding and bad lending that fueled it there, but otherwise I see this wave of earnings reports positively, including this one.
And if there was a negative bent, hey, at these price levels so what. Besides, these guys often get it alittle wrong that way, on the way down they were sometimes too positive bragging they were a conservative bank and ¨we didn´t do that¨ bad stuff, maybe on the upside they will be a bit wrong on that too and be a bit too negative.
lol....no dreaming involved as I am not long OR short the stock. But answer this....if they have such a "valuable brand name, solid capital ratios and a great footprint" then why is the stock 3 1/2 bucks and NOT bouncing up like other good banks???? Perhaps the answer is....that they DON'T have those things after all.
Chicken littles got washed out, big deal. Those who are in it only for a short gain and weak hands are not the market, they are only part of it and they are often the ones who make short term buying opportunities for longs.
The whole financial press going into this earnings season were on soapboxes squawking it would be a disaster, and it wasn´t. It was actually pretty good considering, especially at the banks.
The cc was positive in that absent the defaults the underlying business was going well, management was focusing on the underlying business and no longer appeared to be in crisis mode, capital ratios were solid, they increased provisions well above existing default levels and they are pretty much doing exactly what banks do when coming off a wave of defaults from a cycle of binge lending like we had.
Keep dreaming, this company has a valuable brand name, solid capital ratios and a great footprint outside of Florida.
The days of underbid are over, long gone, they happened in 2008 when everyone was running scared. Things changed in early 2009. With this last wave of earnings reports things may have changed even more.