I get it shorts. You guys are the smartest guys in the room. Congrats.
Now that I got that out of the way, for those of you who are long-- I do not get the big drop. These guys are growing right now. They are taking brokers from the big wire houses. They were not too mixed up in the mortgage mess. They have at least positive earnings. I really feel like at this point nobody wants to own financials at all until the new administration gives us some clarification on what they are doing with the big banks.
Boomers will still hire advisors and there are more boomers getting close to retirement than ever. Although, I am certain a lot of them will push it off.
I think RJ could double the number of reps it has in the next 5 years or at least grow by 50%.
I see a strong move back to the $15 to $18 range once we get some of these bank issues resolved. I guess the question is when will that happen?
Any intelligent input besides "ha ha I am short and a genius but I spend my days trolling various bulletin boards even though I am obviously so wealthy from all my shorting"?
my broker is a branch manager at rayjay , hes constantly out trying to steal those merril reps and build his book, ive been with him for 15 years , there actually a very good outfit and i concur with everything you stated ,just thought i would let you know your on the right track
Have you ever tried to get a loan from RJF? Good luck. Your credit quality has to be outstanding, somewhere in the 720-750+ credit score. this company does not write poor loans. Never has, never will. the corporate loan portfolio is extremely solid. the growth in the loan portfolio has come from the fact that the company is now sweeping money to the bank instead of an outside money market linked to the brokerage accounts. this allows the company to earn 200 bps more on the idle cash. solid company. short here and you will get burnt.
Again, you have some great points. However, I would hope there would be a difference in loan quality since RJ was not packaging the loans to sell them. Unless I am mistaken, RJ keeps the loans on the books which gives them ever incentive to make sure they perform and are of good quality. They will have non-performing loans but I would be suprised if they get any where near the level of some of these fly by night operations who did stated income only and very little money down.
Good call on GS by the way.
In addition to the residential you mentioned there is large Commercial Real Estate and Construction loans outstanding, which in addition to the residential makes up the majority of the loan portfolio. CMBS spreads are blowing out right now signalling deep trouble for CRE loans. The entire loan book looks like it is in heavily distressed residential, commercial, and construction...I saw the book grew from 04-08 from minimal loans to the total now leading me to believe most of the loans were done into the bubble with loose lending standards...I could be wrong but with the lax lending standards across the board over the past 4 years I would think it would be hard to grow a book of loans that size offering significantly tighter standards than the competition. This week should be interesting I am on the sidelines but would probally look into shorting runups in the financials if mark to market gets suspended. Good luck.
I understand what you are saying and you have a good point.
The residential loans are about 2.3 billion of the total 7.7 billion. A good number of them are 3, 5, and 7 yr ARMs so maybe they can get rid of them with people refinancing at better long term fixed rates. It will be very interesting to see how they are performing at the next quarterly report.
I do know that they are adding advisors. People are leaving the larger wire houses in droves. The two big players for the independent broker dealers are Raymond James and LPL. LPL is private for now.
I would think that TD Ameritrade and Schwab will also benefit in the long run. As the advisors who do not want the broker dealer (commissions) model will start independent RIAs or join RIAs who will use these guys as custodians. The only other major player for fee-only RIAs would be Fidelity. I know business will be down for current advisors but they should be able to make up some of the loss with new advisors joining the firm and transfering over assets.
Anyway, I hope to see some sort of pop in the stock in the short term for no good reason other than I am just tired of watching everything go down.
Don't take the drops personal. You have to remember that the shorts are not just shorting individual stocks but they are heavily playing the 3x short ETFs and other instruments.
RJF is a very good long at these levels. However, in a market like this fundamentals are not only difficult to gauge but you are at the mercy of the overall market as few industries have decoupled from the equity blood bath.
RJF may end up coming out of all of this as the strongest brokerage firm in the country as they are increasing advisors across the board due to their reputation.
Keep in mind that the days of the financial stocks selling at 18-20x earnings are gone as the use of leverage will dissipate considerably. RJF should be in the 12-15x PE range when the dust settles....hopefully sooner than later.
i agree, but expect another few months of falling. A dead cat will bounce of the ground a couple times when it first hits bottom. Give it time people, things will start turning back around and all the shorts will go long with the rest of us.
I'm also baffled. RJF is dropping much faster than any relative index. BV is $15+ PE is now 5+, Earnings are down but not drastically and no significant write offs. No bad news unless you consider Tom James retirement bad. So what is the short's rational? And who is buying the heavy volume of the past week?
This used to be a sleepy little stock but a lot of drama lately.
Article yesterday in Investment News from yesterday confirms my thoughts on recruiting. It takes 6 months to move a broker over, however. So, there will be a lag.
Whats going on ???
Are you all that stupid ?
We are going into a depression .
NO one trusts "advisors" . People SUE advisors .
Whats an advisor anyways ???
A drunk w/ a tie who memorizes a mutual fund pitch ??? Yes .
RJF is going to 7 .
Enjoy the ride.