1. Susquehanna Bancshares (own-Regional Bank Stocks strategy-category 1): SUSQ announced after the close on Monday that it would be selling 300 million in common stock and 50 million in a TP issue. This caused the stock to lose some of its recent gains, falling over 7% in trading yesterday. These dilutive common share offerings for long time shareholders have been commonplace over the past year. The entire market capitalization of SUSQ is less than 800 million. While the share price has recovered some since hitting a low of less than $ 4 in 2009, the current price is well below the $27.50 level reached in 2006. Susquehanna Bancshares, Inc. Share Price Chart | SUSQ The 52 week low of $3.78 was lower than the low reached in 1990 during the last banking debacle.
My shares were bought as a Lottery Ticket at $ 5.85. Susquehanna Bancshares is not too specific about what it intends to do with the proceeds, giving several possible alternative uses for the capital. Possible uses include the redemption of all or a portion of the government's cumulative preferred stock or to support future acquisitions. The 300 million number is close to the outstanding balance for the government's preferred stock.
The recently filed annual report shows the book value at $19.53 per share and the tangible book at $7.25, as of 12/31/2009. Susquehanna Bancshares Inc--Form 10-K Possibly, management was waiting to sell common stock until the price at least rose over tangible book value per share. The capital ratios are in excess of the regulatory guidelines for a well-capitalized bank. (see page 99).
After the close SUSQ announced that it priced the common shares at $8. The 50 million in Trust Preferred were priced to yield 11%. Susquehanna
2. Report from Employee Benefit Research Institute on Retirement Saving: This organization released the results of its annual survey on retirement savings. Workers in the U.S. have done little to save for their retirement. According to this survey, 27% of workers have saved less than $1,000. Over 54% reported that their entire savings, excluding defined employee benefit plans and their homes, was less than $25,000. EBRI
3. Speech by Chicago Fed President: Charles Evans stated that the "sheer magnitude of unemployment today is so large that there is little doubt in my mind that there is considerable slack in the economy" Federal Reserve Bank of Chicago He added that in his view "employers remain cautious. Job openings are still scarce, and there are few signs, even anecdotally, that permanent hiring has picked up yet." He interpreted the Fed's language about keeping the accommodative policy in effect for an extended period should mean at least for the next three or four meetings. Reuters
4. Added 50 AMAT at 12.28 (See Disclaimer): I have emphasized on many occasions that I am not a tech investor. The buy yesterday of AMAT at $12.28 brings my total exposure to 150 shares with an average cost somewhere south of $13. I previously traded some shares at a small profit. I am going to classify all 150 shares as part of my 2010 Speculative Strategy. While my opinion on AMAT is worthless, even to me, it does seem that the stock is undervalued at its current price. Earnings are estimated to increase from 71 cent in the current fiscal year ending October 2010 to $1.13 in FY 2011. AMAT just announced a dividend increase and a share repurchase program. The balance sheet is solid with over 2 billion in cash: AMAT: Balance Sheet I discussed yesterday estimates that chip equipment orders will increase 75% this year according to Gartner. Reuters
With the recent quarterly dividend increase to 7 cents per share, the yield at a total cost of 12.28 is 2.28%.
5. News on the TC GJX: This TC ceased trading on the NYSE yesterday. It has been suspended from trading according to a news release from the NYSE on the 8th. Press Release 03-08-2010 I no longer own any shares. The potential delisting has to do with the acquisition of Burlington Northern by Berkshire, and Burlington making a filing to delist all of its securities. Two things may happen now. This TC may show up in trading on the pink sheet exchange which happened for GJAZ and SSRAP which were voluntarily delisted, or Berkshire will satisfy the NYSE listing requirement for this security. New symbols were assigned for trading after the delisting of those securities.
6. Dividends and Interest: I noted that the following securities go ex dividend or ex interest on 3/11: GFW, AHLPRA, PSY, BTZ, BDV, BDJ, BDT, BCF, KO, EBI, FRPRK, HBAPRD, TAXI, MJH, JSN, JDD, JGT, JQC, JPC, JSN, JTD, OLA, OFGPRA, NYX, PBIB, PFBI, STL, & VNOD.
7. Huntington Bancshares (HBAN)(own Category 1 Regional Bank Stocks strategy): I read a letter from the CEO, Stephen Steinour, to the shareholders, recently filed with the SEC: EX-99.1 He feels bad about the bank destroying shareholder value and reducing the dividend relied upon by so many. He says that it would be prudent to keep the government's TARP funds "should any unforeseen issue arise" . The bank intends to pay back the TARP before raising the common stock dividend. He claims that "risk management" has been strengthened which is hopefully an accurate representation. And, he asserts that sometime in 2010 Huntington will return to a profitable quarterly performance.
I do not have any confidence in HBAN management having seen over 20 years of value destroyed before I made a Lottery Ticket investment by buying 50 shares at $4.27 and another 40 shares bought on a coin flip at $3.7. Possibly some of the newer employees will turn out better. Long term shareholders received a massive dilution of their ownership interest when the bank sold 400 million dollars of stock at $4.2. exv99w1
Category 1 is reserved for those banks classified as speculative, where a turnaround is conceivable even with poor management. The long term chart of HBAN shows that the current price is hovering at 1990 levels, an extraordinary accomplishment, but nonetheless an improvement over the $1.5 or so price in early 2009, down from $24 in 2006. Huntington Bancshares Incorpora Share Price Chart | HBAN
Other banks in Category 1 include Regions, Marshall & Ilsley, KeyCorp, Synovus, and Webster. WBS has been a very successful investment in this grouping, bought in March 2009 at $4.58 (and the holding period will be one year on 3/19). EWBC was promoted to Cat 2 after I gained some confidence in management (bought at $5.7 last April). SUSQ is the only one currently in category 1 being considered for a promotion to Category 2.
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