Not your concern. It's "little" relative to the sums invested in other stocks in the portfolio.
The reason we care is that we're both traders and investors. It's the investments that give us the most trouble. We've still got quite a few stocks that we've held for more than 20 years, but they keep getting bought--often by foreign investors in cash transactions. Everything else we do, except Municipal bonds (impossible just now, imo,) is subject to very punitive taxation: we wind up netting about 50% of the gains.
So, stocks like NYB that have been radically and deeply discounted, held at important longterm support, and seem to be moving sideways are very important to us; because they represent a "savings" opportunity, worth the capital at risk when accumulating in the base. We'd like to see NYB continue like this with an increasing infestation of value players as the stock dissappoints more optimistic types.
That said, I'd be a lot more comfortable if NYB were an investment grade bank--like, say, Sun Trust or Wells Fargo: these tend to appreciate almost automatically from panic selloffs like we've seen in NYB: (regression to a mean historical valuation--what the trade has borne.)
So, I guess you could say that we're primarily interested in the opportunity created by the price collapse. My general theory is that real opportunity on anything other than a trading basis is not so plentiful in the financial markets, so you've got to care about it.
From an investment standpoint, I don't think anyone has really improved on Baron Rothschild's nasty old maxim: "you buy when blood is running in the street." Even then, the money is the real and the potential is...well...just potential; so you'd better care or stick with your day job.
Hope that explains it. I don't want to belabor these points any further.
I'm not sure I understand your first point.
As to the second, I'll use Moody's, S & P, Value Line, and/or the institution, commercial paper, and debt ratings in The Mergent Bond Record. Even so, I rarely understand a bank in very good detail.
What I did in the case of NYB was just to go over the Value Line statistics on the fundamental history of NYB on 3 or 4 metrics, (not their recommendations on the stock,) to see whether the sell-side analysis of the stock at the time of the collapse was accurate. Came to the conclusion that the bank was never as good or as bad as anyone was saying.
I, then, began to look at the stock entirely in technical terms and waited to see what Schmidt and other bank value investors would do.
We're pretty much neutral on NYB, our small initial position being not much more than "takeover insurance" against the analytic work involved.
Our objective here would be a gradual accumulation of something we might not have to sell for years. These kinds of assets play in an important part in our primarily-taxable portfolio, especially when Triple Tax Exempts don't seem to be an option.
Ain't Wells-Fargo, but you're not likely to see a similar technical collapse in a property of that quality.
And now the financial houses are probably beginning to wonder whether George Jr. is much of an asset........???
How much did George Soros net from Lt Calley Kerry, Whiplash Edwards & the DNC so far?
Instead of VALU, why not consider Moody's ratings of NYB etc etc?
One has to wonder how many industries are beginning to find out that these politicians aren't worth the cost of their keep. Big Pharma certainly spent plenty and didn't get much. And now the financial houses are probably beginning to wonder whether George Jr. is much of an asset.
They're holding 30k shs of SOV, unchanged since the April interim. In fact, I believe they've held SOV without adding since it was in the toilet a few years ago(?) but couldn't swear to it.
Since we've been talking about the BTO portfolio, I should mention that we're probably going to sell the entire position early this year--the timing determined by whether the broad markets are now beginning to put in a top. IMO, the current bull cycle in this fund began 4/03, following on a period of relative outperformance during the bear market of 2000-2003.
From a fundamental standpoint, Schmidt had two very good chances to load up in early 2000 and at the 2002 bottom. The portfolio as a whole is now very appreciated, and it's become increasingly difficult for him to replace what's he's selling.
From a technical perspective, the banking sectors tend to put in their tops somewhat in advance of market-wide tops--particularly in bearish rate environments.
It's possible that this market cycle will be extended by an infusion of liquidity from the Social Security trusts. But, so far as I can tell, the Bush Administration is having trouble delivering on this idea--despite the vast sums they took from the financial industries.
Difficult to read the market just now. It's doesn't seem likely that the institutions can continue selling at the pace established this week, at least not if they want high prices for their stock; so, I'm assuming that they'll begin buying fairly soon, if only to make a market. We'll have to see how that uptrend looks.
I have long shared Schmidt's belief that the US is over banked (by at least a factor of five, in my view). If only I had the resources to ride more horses to the finish line!*
While I respect technical analysis, the world of thrift conversions is heavily colored by the personal visions and skills---or lack thereof--of the CEOs involved.
In many cases, ambition exceeds ability. Example: SIB. I doubt whether the dismantling and sale of the dominant SI franchise was the way Harry Doherty really wanted to make his exit. He was apparently done-in by Ivy Mortgage---a distressed bauble that was taken off his hands by the helpful folks at Lehman Bros. before the core banking operation was sold.
I therefore suspect Mr. Schmidt takes at least a passing glance at the occupants of the executive suite before he makes a move.
Is he a player in Jay Sidhu's high-stakes poker game at SOV?
*Right now, I'm getting liquid for the current wave of thrift IPOs, which comes to NJ later this month.
There really aren't so many short sellers in NYB now. Not surprising, as the real short money was clearly at the top.
If you're talking about the "naked shorting" issue, that's now being resolved by the SEC, and stocks where's its been an issue, like NFI, should benefit to some extent.
No, I think the real problem in NYB is that there are still an unknown number of institutional investors who need or will need to get out of the stock, while the value people are quite unlikely to pay more than they've absolutely got to.
In other words, what you're seeing here is mostly plain selling--the shedding of risk--rather than short selling.
My guess would be that the "strong" holders now in the base aren't very interested in a takeover at the moment, as it would give them but a small trading profit on a investment they believe to worth more. I know this is the way we feel, right or wrong.
If one wants to trade stock, there are much better vehicles out there.
"But the stock tends to be "imprisoned" in its base until this happens, the value people having no particular incentive to reach up for the stock and the more performance-oriented investors having many incentives to dump it on poor markets, bad news, or what-have-you."
I think that when a stock in in this predicament that the shorts use this as an opportunity to clobber a given stock at a opportune time that exacerbating an already bad situation.
It is my understanding that shorts are "supposed" to borrow shares from the people who have bought the shares on margin. However, I am not sure this is the case, and hedge fund managers and the like tend to "act in concert." This will toss charts into a tailspin. Moreover, shorts have "deep pockets" and think nothing of using mega bucks. -- Consider the timeliness of this action, just before earnings ... and when a stock is falling, they (the shorts) know that no one will catch a falling blade.
BUT - I think that the shorts will cover and then, will not only will they cover there position/s, but go long and ride it up and down. There is nothing wrong with someone being short in the marketplace, that is legal on an uptick. However, it is the "acting in concert" that I find disturbing - and if this action it is ever uncovered, people will not fully understand it anyway. To say that the market is not loaded with people "acting in concert" is naive.
The heavy throb
of a deisel engine
long into the night
comforts me in sleep -
the rhythm of your heart
Oh, yes. And no doubt happy to take the money.
I believe they sold about about one portfolio bank per month in the second half. Schmidt's kind of laconic, but he appears to think that the US is still wildly overbanked, and that the trend towards consolidation will continue indefinitely--albeit in fits and starts.