BUY on Dips - Stock is heading higher long term and why
A drop in share price will provide an opportunity at a discount. All the negatives are gone. The drop in the market overall is great for those accumulating as I have. I will continue to add shares on weakness. Earnings will return with a possible increase in dividends. First Niagara could'nt do the HSBC deal without due diligence. The housing industry is picking up in several states. I did some research and found that money is going to come into Niagara Falls US side, for development. This will create jobs, home sales, and loans that FNFG has a large part in.
The question of due diligence is interesting. Much depends on the goals of the management and board. If you assume you will retain many of the HSBC customers and your goal is to create a larger company with increased payment to the managers this would look like a good deal. If you are interested in a better return for the owners (stockholders) and are conservative in your predictions on retaining the HSBC business, you come up with a different conclusion. Did HSBC do due diligence when selling this part of the business? Did anybody look at the fact that the purchase of the HSBC branches would require considerable dilution of shareholder equity at a time when the stock was apparently undervalued? In my opinion, management either blew it badly or they have other objectives in mind than improving shareholder value.
This is a banking market in which you either need to grow or be swallowed. The shareholder interest will be served best over the long term in either growing or getting a buyout offer of value. Short term return for the stockholders can't be the most important consideration.