you are viewing a single comment's thread.view the rest of the posts
Are you saying that BBT has put bad figures in their proxy material? These were not my figures they were in BBT's proxy material dated March 25,2004 on the bottom of page 36. It states that $100 invested in stock 12/98 including reinvestment of dividends would be worth $110.95 on 12/03. I believe I stated in the original post that the above figures were from the proxy.
You forgot to include the fact that a share of stock was worth $40.31 on 12/98 and the same share of stock was only worth $38.56 on 12/03.They have also not averaged a 3.5% dividend for the last five years.
Oh, by the way that same share that was only worth $38.56 on 12/03 is now worth $34.25 end of day May 17,2004. If the proxy is correct then the $100 investment would only be worth approximately $101 today.
This means you would have a roughly 1% total return for almost 5 1/2 years.
The stock was overvalued in 1998. You should have taken some profits along with the other overvalued stocks of the time. Compare the same results over those 5 years with most bank stocks and the S & P returns. I think you will find them to be negative. That argument doesn't hold water and isn't a reason to sell. The bigger concern remains the price paid for FVB for what they got. Also, the company has got to invest in more distribution in the bigger markets they serve and reduce the costs or number of branches in the small town markets that they serve. There is a lot of soul searching going on at this company right now. It will either emerge stronger or be sold, plan and simple. But there isn't much downside absent a market shaking world news event.
My charting site only goes back five years, so maybe that December '98 - May '99 timeframe was significant... but it shows that (NOT including dividends) BBT is down 8%.
Over the same period - the S&P is down 18%.
Including dividends obviously increases the gap between the two. A relatively conservative core holding that outperforms the S&P over time seems like a good bet to me.
One disagreement though... It wasn't that they "overpaid for what they got" in FVB. It was that they "missunderestimated" how much they could improve the profitability of an already quite profitable bank. When you pay a premium you assume you will recoup that expense in operations savings and increased profits from those locations.
FVB was already pretty lean (can't cut as much as you thought) and quite profitable. Add the difficult market conditions lately and it will just take longer than anticipated to add to the bottom line... but it WILL happen. I know these people... they were worth the cost.
If you want to compare banks, please check BBT's proxy material dated March 24,2004 page 36. The bank's own PEER GROUP shows that $100 invested 12/98 would be worth $124.31 on 12/03.
According to the company's proxy for this time frame the same $100 invested would have only been worth $110.95 less than half the return of the average. This means their stock performed less than HALF as well as the average of their peer group. This is the PEER GROUP that they chose.
Please note this is not the better performers of the PEER GROUP, just the average of all the banks included.
I know that hindsight is 20-20 but I wonder what that same $100 would be today if it were invested in EE or I Bonds in 1998? My 6% Bonds from 12 years ago are looking better and better every day.
I hear that more RIF's are in the wind. Wonder if JA is one of them?