What is Your Edge?

Posted on 30 CommentsPosted in Industry-Banks, Investment Philosophy, Saber Capital Management

A couple months ago I read an investment write-up on a large-cap stock that is one of the most widely followed and largest companies in the S&P 500. There was a comment that basically asked the following question: “What is your edge with this stock?” The implication of this question is that there isn’t any edge to be had with large, well-followed stocks, but there is an edge to be gained with small, underfollowed stocks. This is a commonly held […]

Wells Fargo and the Incredible Predictability of Deposit Growth

Posted on 35 CommentsPosted in Industry-Banks, Investment Ideas & Company Research

“In the end, banking is a very good business unless you do dumb things.” – Warren Buffett Buffett has been investing in bank stocks since the 1950’s, and I think one of the things he probably likes most about banking is the predictability of deposit growth. As he says, if you don’t do dumb things—if you stick to taking in deposits and lending them out, you’ll mint money. All the money center banks reported earnings a couple weeks ago. In […]

Being Cheap, Best of Munger, a Rare Bezos Interview, and Other Links

Posted on 6 CommentsPosted in Charlie Munger, General Thoughts, Get Better by Reading, Investment Philosophy

I was catching up on some links and articles this weekend. Sometimes, things that are interesting but not time sensitive get pushed to the back burner. In these cases, I sometimes create a file filled with things that I’d like to read and the early morning Saturday hours are sometimes a good time to catch up on these things. Anyhow, here are some things I’ve read recently that I read that I thought readers might be interested in taking a […]

A Few Thoughts on Buffett and Great Banks

Posted on 10 CommentsPosted in Case Studies, General Thoughts, Industry-Banks, Superinvestors, Think Differently, Warren Buffett

I wrote a post about screening for quality bank stocks and another one here about Wells Fargo vs Cheap Community Banks and thought I’d post on some other comments I have here. Some of these thought might sound contradictory (everyone wants to separate stocks into categories based on quality/earnings and cheapness/assets). It’s not black and white, and all we’re really trying to do is figure out what something is worth and pay less for it. As Alice Schroeder has said, […]

Wells Fargo vs. Small Community Banks

Posted on 12 CommentsPosted in Case Studies, General Thoughts, Industry-Banks, Investment Ideas & Company Research, Think Differently, Warren Buffett

Charlie Munger once said that he compares every possible investment to Wells Fargo… Why buy company X if it’s not as good/cheap as WFC?  For weeks I’ve been slowly and steadily working my way through hundreds of small community bank stock filings looking for bargains. A good friend of mine lately has been the trusty old FDIC website where you can find current/historical financials on banks to your heart’s content… But after a few more hours of sifting through Call Reports […]

Quality Screens: Part 2

Posted on 12 CommentsPosted in How to Improve Results, Industry-Banks, Investment Quotes

In Part 1 of this post, I looked at some quality screens I look at occasionally to generate ideas. In this second part of the post, I thought I’d briefly review an industry specific screen that I put together more recently that I will make a point to review every month or so. I’m doing a lot of work on bank stocks lately, looking at a lot of cheap stocks selling for significantly less than their tangible book value. I’ll […]

Notes on Thrifts and 4 Stocks to Watch

Posted on 6 CommentsPosted in Uncategorized

Last week I went through the Value Line section on thrifts and wrote down some notes and thoughts I have on the industry. Thrifts and small community banks have had a rough few years, but many have survived and repositioned themselves to prosper going forward. Many of them have cleaned up their balance sheets. Many of the bad loans that were written in 2005-2007 were 5-7 year balloons. Time will help heal these banks. More importantly, the residential real estate […]