As a CRBC shareholder, that may or may not participate in the FMER/CRBC swaparoo, I've been trying to learn more about FMER. However, the name is a puzzle.
I just do not understand:
1) Why is this MB so quiet -- does anyone follow FMER?
2) Why FMER has sold off so dramatically since the announcement of the CRBC merger? FMER is buying CRBC on the cheap and would seem to be worth the price of dilution for long term FMER investors. There seems to be a decent fit between the banks and FMER has demonstrated some chops in making acquisitions.
3) Why has FMER so underperformed its Midwest Peers (HBAN, KEY, FITB) - since the financial meltdown debacle. This is nothing new -- FMER has underperformed for the past 3 years. (Yes, FMER did better during the 2008/2009 debacle 5 and 10 year better -- but hey, I didn't buy back then...)
Today's results seemed to be in order -- not spectacular but very solid. All of the metrics are moving in the right direction -- but yet FMER shares continue to well under-perform. Why is the name so un-loved?
The professional arbs short FMER stock and go long CRBC after the merger was annouced and they will continue to play this game until the merger closes. It is a time tested way to make money by Ben Graham in the 1920s. For example FMER stock dropped almost 2 points on the day the merger was announced.
I on the other hand have been buying FMER on weakness because I think the stock's decline was way overdone. I also think that FMER will benifit in the long term from the merger as the merger will be accretive to EPS.
FMER is a very solid bank and did better than 99.9% of the banks throughtout the country in the last downturn as well.
Understand the arb play and completely agree with your assessment of FMER. I've listened to their last few presentations and reviewed their financials. Agree that they are undervalued and I will probably begin to accumulate. That said, what I do not understand is why the market does not take closer notice to the name. They remain under the shadow of your other Ohio regionals -- FITB, KEY and HBAN. M* has fair value of FMER at $19 -- so we should see some upward movement if the macro market does not tank. Then, I suspect somewhat of a flat line until CRBC is fully digested and results start to show in Q1 2014.
I don't get it either dhdhoora. Jim Cramer likes it (to caller after CRBC buyout news). I followed you into FBC ( From CRBC). Thanks. I'm looking at each EGHT now. Any thing else look interesting to you Don?
I too bought some shares and the trend has been down since. With a 10% short shown on the books a bounce will come soon. I think this banks value is a much better then the 52 week low. The purchase of crbc will pay big dividends down the road.I am also watching ibcp, a small michigan bank about to sell branches to chfc. It also is do for a reversal soon.
I agree, I just bought in over at $14.17 last week because of the reasons you mention. It is trading below book value as well, doesn't make much sense to me. I am optimistic though and think we will see $18-$20 within the next year.