BAC is cheap too, but my family is overweight in their stock now. No need to add more to it. BAC is still down from the fleet merger, which they over paid for Fleet.
If you both a PE of 13-15 on a bank stock, then BAC would get a lot more than $84. EPS of $7 would get you 91-105. Banks pay out a lot of EPS in div. You can be assured of high % of your earnings being paid out in cash and the rest being reinvested at good ROE rates.
I think the kicker for NYB is the ROE, but the draw back is the huge price/bv. Earnings/net tangible assets is out of this world. That is very nice. It is over stated due to nice bank enivornment of the past few years.
Things going for NYB
1. Nice div yield, which is safe in MHO 2. EPS will be $3ish after the MBS runs off. 3. Management is very shareholder friendly. Everyone is pissed about the 40% drop in stock price. Yet a lot of shareholder friendly stocks get punished with bad news. That doesnt mean management isnt fight for shareholder value. I seem to remember a bad time in early 2000 of a stock you know about, but management still returned value to holders. 4. The New York market is a nice market to be in and those branchs are worth money that isnt on the balance sheet. A buyout if it ever happened would get nice premium to IV assuming no MBS problems. MBS problems look to hurt bid to being around 90% IV, which sucks for control.
Basicly I dont see why market is doing what it is doing, but the market screws up a lot. I am heavy invested in NYB, and only Berkshire is larger.
One more thing. NYB was priced at forward PE of 18 earlier this year. Now it is priced at forward PE 10(that is with lower earnings est) So say it takes 5 years to run the MBS off. 3EPSX18 would be a $54 with div over those five years. That is a very rosy valuation, but unrosy valuations will still give a great return.
I keep looking at the data and dont see a long term problem save another large bad investment. On that note, I dont see where they have any funds to invest badly right now otherwise they would try to dilute the MBS damage to NIM.