What Makes Merchants Bancorp (MBIN) a Worthy Investment?
Moon Capital Management, an investment management company, released its fourth-quarter 2023 investor letter. A copy of the same can be downloaded here. A year ago, a majority of the economists at 23 large financial institutions that conduct business with the Federal Reserve predicted an upcoming recession in the U.S. for 2023, indicating a challenging period ahead. Instead in 2023, the U.S. economy grew by over 3%, and the U.S. stock market had returns ranging from 14% to 24%. Moon Capital’s portfolio equaled the S&P 500’s 24% return. In addition, you can check the top 5 holdings of the fund to know its best picks in 2023
Moon Capital featured stocks such as Merchants Bancorp (NASDAQ:MBIN) in the fourth quarter 2023 investor letter. Headquartered in Carmel, Indiana, Merchants Bancorp (NASDAQ:MBIN) is a diversified bank holding company. On January 26, 2024, Merchants Bancorp (NASDAQ:MBIN) stock closed at $43.50 per share. One-month return of Merchants Bancorp (NASDAQ:MBIN) was 2.16%, and its shares gained 65.02% of their value over the last 52 weeks. Merchants Bancorp (NASDAQ:MBIN) has a market capitalization of $1.881 billion.
Moon Capital stated the following regarding Merchants Bancorp (NASDAQ:MBIN) in its fourth quarter 2023 investor letter:
"We recently purchased shares of Merchants Bancorp (NASDAQ:MBIN), one of the best run banks you’ve never heard of. The company has compounded its tangible book value 30% annually for the last five years – compared to 7% for First Horizon, 9% for JP Morgan and only 4.5% for the S&P 500. MBIN consistently earns a 25%+ return on tangible equity, operates with one of the best efficiency ratios in banking yet, at our purchase price of five times earnings, it carried one of the lowest multiples in the entire sector.
Over the years, Merchants has carved out a couple of highly profitable niches in its Multifamily Mortgage and Mortgage Warehousing business units.
The agency-backed, Multifamily Mortgage business consists primarily of funding low-risk loans that meet the underwriting standards of various government programs, under an “originate to sell” model. Merchants serves as an authorized agency lender for Fannie, Freddie, FHA, and USDA – the list of financial institutions with this designation is surprisingly small. (Of the more than 4,600 banks in the U.S., only a couple dozen are authorized agency lenders.)…” (Click here to read the full text)
A banker closely examining a document while seated at his desk.
Merchants Bancorp (NASDAQ:MBIN) is not on our list of 30 Most Popular Stocks Among Hedge Funds. As per our database, 10 hedge fund portfolios held Merchants Bancorp (NASDAQ:MBIN) at the end of third quarter which was 9 in the previous quarter. In addition, please check out our hedge fund investor letters Q4 2023 page for more investor letters from hedge funds and other leading investors.
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Disclosure: None. This article is originally published at Insider Monkey.
