I've decided to regularly post my thoughts relating to "Benjamin Graham Screening" and "Academic Studies on Value Investing" at:** www.ShaiDardashti.com **(Of course, I'll continue to periodically contribute and reflect on others' thoughts here at TMF...)===The blog is slowly taking form. As evident from some of my communications to members of the board (both public and private), and the early content of the blog, I'm still very much developing my own investment style – based on Graham and eventually adding “Buffett-esque” / “Fisher-ian” qualities. As stated a few times, all the insight from everyone on the group is extremely appreciated - and I really do thank you for your feedback. === I posted the results of some of my Graham inspired stock selections, the culmination of some research that attempts to update a Tweedy Brown report on academic studies to modern investment conditions, and a concept blog that borders on looking towards technical analysis as a means to identify fundamental elements that would be beneficial in adjusting the Graham screens, and hopefully sustain better performance... I'd be curious to hear some educated comments on the matters. Feel free to email directly. Best,Shai Dardashti ( ShaiDardashti@gmail.com )
My opinion is to simply dive into lots and lots and lots of specific companies, doing valuations, looking at interesting features, doing comparisons, and learning things as you go. Sometimes you might spend hours learning about galvanized widgets and comparing details of various galvinized widgets makers. I spent many hours sifting through 430 startup community banks. I found no particularly good investments, which itself is a startling discovery. Let it get messy and disorganized. Don't be afraid to jump around seemingly randomly. Try to make only those conclusions justified by what you've observed. Approach it with intense curiosity and disciplined observation (which I find easier said than done).DeliLamahttp://pink-sheets.blogspot.com/
Hey!I'm delighted to see your blogpost and will definitly put in on my favorites list. I didn't see too much of what you wrote on the banks but I've tried to invest in very small banks for years. My experience has been that if you find a small bank on the outskirts of a booming population area, you'll possibly do very well. But when I say small I mean small. For instance I've been looking for small (one building, no branches) in small towns in northwest Mississippi. They are "public" but are no where near pink sheets... you often have to call the bank to get shares, they'll sometimes have a list of folks and the prices they want to sell at.can be very lucrative in the old fashioned Ben Graham way but you have to find them the same way Graham did... basically going house to house. The best several have all been swallowed but it's still occurring.They're not on anybody's list.it's fun finding them though actaully buying the shares can be difficult. Once I had to open a sizable checking account before the bank president would even "allow" me to buy... which I did lolol glad to see your blog, I'll be a regualr visitored
"My experience has been that if you find a small bank on the outskirts of a booming population area, you'll possibly do very well. But when I say small I mean small. For instance I've been looking for small (one building, no branches) in small towns in northwest Mississippi. They are "public" but are no where near pink sheets... you often have to call the bank to get shares, they'll sometimes have a list of folks and the prices they want to sell at."My criteria for banks was:1) started after Jan 1, 20012) less than $100 million assets (ideally around $30 million)I found a lot of banks where you need to call "Sue" or "Bob" who matches up buyers and sellers. I was hoping to find more pink sheet banks that were good investments. I'll definitely return to them, especially if there's any kind of large scale bank selloff.I relied very heavily on the FDIC database for comparing banks to each other and to peer groups (assets, deposits, assets per employee, various capitalization ratios, etc.) In fact, this was part of the appeal of looking at small banks. They might not report to the SEC, but they always report to the FDIC.Probably the most startling thing about the pink sheets, in general, is how efficient the market is for pink sheet securities. It says good things about our economy when even these backwater companies often get a fair shake in the capital markets.DeliLama
They are "public" but are no where near pink sheets... you often have to call the bank to get shares, they'll sometimes have a list of folks and the prices they want to sell at.This must be at least part of what Buffett is talking about when he says he could do 50%/year if he only had $1,000,000 to invest. Do you see anything like that kid of success? R:
gotta admit that's the right metric but why on earth look for banks started after 2001?? To me, anyone interested in starting a bank right now is interested in personal wealth and prob ain't sharing. I wanted (and want) banks that have become part of a community... been there for a while... and lots of small deposits. I wanted banks that have way more customers than their metrics would predict meaning they have an audience but aren't getting near the profit a well run bank would get... that's the bank that NBC is looking for... worth alot more than it looks like on paperrun into any of those??ed
"gotta admit that's the right metric but why on earth look for banks started after 2001?? To me, anyone interested in starting a bank right now is interested in personal wealth and prob ain't sharing."Well, my thinking was that a bank during the startup phase doesn't look very attractive to most investors. They lose money, equity slowly disappears. But as the bank ramps up, it becomes successful and the stock price rises to a full value.I can take any number of banks and look at all the details during each phase of the startup cycle to get a good sense for what a succesful (and unsuccessful) startup bank looks like. If I can find a new bank where I have confidence that it is ramping up very well, but the stock price is low, then I can make money. This can be tricky because while the bank is ramping up, it's losing equity.The problem that I see is that community banks seem to have a loyal group of investors and they don't run and panic when the bank loses money during the first year or two. I was hoping to find lots of choices to invest in, but I haven't found them yet. The problem with perhaps finding a single good investment out of 430 potential investments is that the odds become higher that there's something wrong with that one bank that I'm not seeing. I don't like scraping the bottom of the barrel.DeliLama
The commmunity bank market is surprisingly efficient (or overpriced if you'd prefer)for a number of reasons. One of the main ones is that there are a good number of investment banks that serve only community banks, many of which are willing to serve microcap clients. So they tell them to buy back there stock, raise divideds, etc...do all the little tricks to boost the stock in a slow growth industry. Also, there are a number of small hedge funds devoted just to investing in community banks and or taking hostile stakes in underperforming banks. M&A has also been quite robust lately, and the banks alightly bigger than community banks are trading at pretty full multiples, so that pulls up everything beneath them. The fact that they have to report to the FDIC keeps they accounting pretty clean and easy to interpret - so screens will pick up anything that is cheap. It used to be that recently converted thrifts were can't miss cheap stocks. (Lynch wrote an article about this.) But with professional depsitors running around now, most of the juice has been sucked out of that too. It seems to be a place where value will be found now is when the industry as a whole gets it cheap, like it was in 2000 when things were selling at 7-8x eps. Those were the days.
"This must be at least part of what Buffett is talking about when he says he could do 50%/year if he only had $1,000,000 to invest. Do you see anything like that kid of success?"I'm no Warren Buffett. Supposedly he reads thousands of 10-K reports every year. They say he never forgets a number. I can read a 10-K on Monday and then read the same one again on Saturday and only have a vague sense of deja vu.Buffett said you have to turn over a lot of rocks to find those kinds of investments. And of course we all know what's under most of those rocks: Horrible things that can give you nightmares. A company making parachutes for entire airplanes (ultra-lights) with a parachute failure lawsuit. A company called BoyToys.com which for some reason has the ticker symbol GRLZ. Companies with zero revenues. Companies that have to re-state restated statements. Companies that can't even file a late-filing statement on time. Zombie companies like Enron and Worldcom. Companies with only a "last known address". Fleeing herds of runaway accountants whose last written words always contain "doubts about going concerns". Broken dreams. Missing funds.As they say, with all this manure I'm digging through there's got to be a pony in there somewhere.DeliLama
Community Banks have been a great place to coin money for many years.The first play was in the 80's when you could go around and open accounts to qujalify for shares pre IPO and it was pretty much a lock.Lately, all you had to do in the Boston area is make easy rough guesses at who TD Bank North or Citizens would buy next.Its really simple: Community Bankers LIVE to be bought by other Bankers.It's the only way George Bailey ever gets a shot at stardom, 3-7 million and an early retirement as payback for not going to Europe or lasooing the moon.I've been watching this one and then it shows in Barron's....@#$%!!My gift to youz: CNBKAIt'll be a little more complicated, but it will work outRead it herehttp://online.barrons.com/article/SB112026002480975888.html?mod=9_0031_b_this_weeks_magazine_mainCheers"ish"
Shai,no rss feed?
...wow, I can't believe how easily I ducked that question. :-)
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