I had never heard of GFED until this weekend, and after spending some time looking at their financials, annual report, etc... I feel like this is a great opportunity that nobody knows about!
I think I'll get in; however, I would like to see a bit of a dip before I do. Not that I think $7 is too expensive of a price to pay--it's more I just think I can take advantage of another small pullback before I get in.
Full disclosure: I am a BKE investor that actually caught wind of this from Chris on the forums. Good to be here!
That isn't a significant issue from a value perspective. What difference does it make if you're buying dollars for 50 cents.
Even with a big position you could liquidate with Good-till-cancelled limit orders. There have been a couple days over the last 6 month with volume in the 25-30k share range, so I don't feel liquidity would be an issue unless you had to sell a bunch of stock in a hurry. (AKA.. don't buy a bunch of this on margin)
Problem is there is no liquidity in this stock. A big day of trading is 1,000 shares. If you have large amount of shares it could be very difficult to liquidate. Cash buyout might be only way out???
10$ would be too low.
That would only be 6.8 times the annualized earnings of the second half of 2011 (after they paid of 25M in FHLB loans) and there are some reasons this should see better earnings going forward than it did during those 6 months.
I think an offer north of 15$ and I'd consider tendering my shares... based on current fundamentals. Later on, if GFED is showing anywhere close to 2$ EPS, then 15 bucks would be too low of an offer.
I think that once the TARP preferred stock, and common warrants on 459k shares are paid off the books this is probably a 20-30$ stock based on forward estimates and typical multipliers.
I don't think $10 would be attractive. Any offer would have to be at book or above for me to be interested. My reasoning for this is by middle to late 2013, TARP very well may be disposed of, dividends reinstated and the stock earning $2+ on TTM earnings with a book value of approximately $17-18. This scenario would have to make the stock worth $20+. The more that I look at this the more I am persuaded that the bank will give the shareholder more value in a 2 year horizon by continuing to work itself into a strong position rather than taking a buyout option. For example, XYZ Bank buys out GFED for $15 in June of 2012, and the alternative is GFED remains a stand alone and is worth $20 - $25 in June 2013. If they were to be bought out, there aren't many opportunities out there that I am as confident as I am in this one to generate a 33-66% annual return in holding for another year if the realistic example noted above plays out.
This buyout information is news to me. I have said all along that someone has to be looking at this. It just makes sense if you are in banking to have to want to buy this as insanely cheap as this is.
What do you think a fair buyout price would be? Looks like GFED could earn between $1.50 - $$2.25 in 2012. Current BV is $14.07. Have heard they have been offered $10, just rumor. Think this is too low, but after 3+ years of no dividends anything looks better than what we are getting now. What do you all think?
I don't know about that (it would be cool if it were true), but Great Southern Bank has made a buyout offer before in 2001.
This is at 3.x-4.x times forward earnings, so that has to be raising some eyebrows somewhere. Right now people are playing the trading game, but this has too much value to muddle around this trading range forever.
A couple of years ago I read an article where somebody asked Buffet what he would do if he were starting over investing. He said he would look for small companies that were too small to get very much attention because there are more opportunities to find under-priced companies.
This is a pretty classic example in my opinion. I've stated before that the only reason I know about the stock is because it's a local area stock, but I bought based on book value. Now it's got pretty excellent earnings too. There seem to be occasions where this drops down to prices that seem "crazy cheap", but I don't know if that's going to happen as badly with earnings as strong as they have been.
You make a good point. Maybe I won't be so lucky. You know how it is--psychologically, it's just tough to look at a chart and buy at these kind of peaks. The company's earnings as of late are what makes me still consider it.
I would like to do a little more research on the economic environment of the local area. I don't know a thing about that part of the US, and because this is such a local company (and a bank, no less), I think I'll look into the economics of the surrounding area.
Apart from that, I'll look for the right entry point. I'm thinking of buying 5-10k worth-- a sizable investment, but I'm not betting the whole enchilada on this one. For some reason, banks still make me nervous.
I typically trade stocks I know and understand. Without having a ton of investment experience with banks, I do my best to stay clear.
This may be the exception.