More Banks , Books and baseball

I had a chance earlier this week to sit down and chat with Robert Hendershott of Context BH Capital. Context is a fund the employs an event-driven, long/short investment strategy focused on the community and regional banking sectors. They invest in banks that are acquisition targets of aggressive consolidators and capturing takeover premiums in advance of acquisition announcement and select merger arbitrage transactions post-acquisition announcement.

This firm was built from academia, not Wall Street. Mr. Hendershott was a professor at Santa Clara University where he wrote several papers about the likelihood of banking consolidation once interstate banking regulations were relaxed. He realized that there was money to be made here and in 1998 he became an advisor to a hedge fund and eventually struck out on his own. In 2010 he started managing individual separate accounts and started the fund in 2012.

Mr. Hendershott pointed out that consolidation has been going on for a long time. When all this started in the late 1980s and early 1990s, there were over 16,000 banks in the United States. Today we are down to just about 6,000. He also noted that the number of publicly traded banks has stayed about the same over this time. The banks that have disappeared via M&A have been small private banks for the most part. He thinks that the thousands of smaller banks in the US are an endangered species right now.

He is cautiously optimistic about community banks in 201. If all the expectations of lowered regulations and tax cuts coupled with a growing economy and higher net interest margins today’s prices will be an excellent entry point. He is worried about the timing and form of all these changes and exactly who changes are made to banking regulations and tax code ...

Read More
Comments

Munger, Political Bile and Reading for Fun

How many different ways can I say that the market looks pretty expensive at these levels and a heightened sense of caution is warranted? My basic view of the stock market has not changed in the past week, and I ...

Read More
Comments

Big Guns, Cheap Banks and Sweet Cash

It seems the hedge fund gurus are out in force of late talking about their view of the market. Ray Dalio of Bridgewater penned a piece in a recent edition of The Economist, and he was less than upbeat, to ...

Read More
Comments

Skinny Tigers, Hot Rods and Talented Armadillos

I didn’t get a Thursday piece out last week as I was busy prepping for my trip to Phoenix and the Bank Directors Acquire or be Acquired Conference. This is easily my favorite conference each year as more than ...

Read More
Comments

Baseball, Brass Knuckles and Wild Weekends

It is going to be an interesting weekend. The Inauguration of Donald Trump as the 45th President of the United States is going to touch of arguments, paid discussions, rallies, counter demonstrations and at least a moderate chance of full ...

Read More
Comments

Just the numbers

Closed Trade History (Realized Gain)

Download CSV

Symbology

Position

Quantity

Entry

Exit

P/L ($)

P/L (%)

Entry Date

Exit Date

EVBS

Long

300.0

$5.03

$9.92

$1,467.00

97.22%

06/07/2013

12/14/2016

TRCB ...

Read More
Comments

Greek Philosophy, Tough Guys and Rubber Necking

In his most recent memo, Howards Marks of Oaktree (OAK) talks about forecasting. At one point he cites Greek philosophy to make his point saying ““If you wish to improve,” Epictetus [first-century Greek philosopher] once said, “be content to appear ...

Read More
Comments

Banks, Cyber and Black Eyed Peas

As we head into New Year’s weekend, I find myself reading a lot of year in review and next year outlook material. I am a big fan of the overviews and outlooks but try to avoid those prognosticators making ...

Read More
Comments

Todays Pre-market show. Banks and a REIT

Read More
Comments

REITs, Reading and Rum

I spent some time today talking with Brad Case about the REIT and real estate markets going into the New Year. Brad is a Senior Vice President, Research & Industry Information at the National Association of Real Estate Investors and ...

Read More
Comments

Holiday Stress,Books and Profitable Inactivity

December is rolling along, and we are edging ever closer to the Holiday. I am starting to talk to some folks who are in a dead panic about what to get from old Uncle Fred or Joe in the office ...

Read More
Comments

Risks, Real Estate and Reality

After a two week hiatus, I am back with my regular weekly ramblings and ruminations on markets and anything else that strikes my fancy. One week was missed due to Thanksgiving of course but the week prior my wife ha ...

Read More
Comments