Monday, November 23, 2009

Regional Bank Stocks/Divorcing Demand For A Service From Any Responsibility to Pay for It/CPB/ Existing Home Sales/ZBPRA

Rather than listening to more whining from the LB about its dismissal as Head Trader here at HQ, Headknocker has generously decided to mollify the LB by giving it several new titles, including Head of Research, Chief Market Theoretician, Department Head for Macro Economic Analysis, and Chief Nerd.

In one of its new job descriptions, and not exactly sure which one is applicable, LB notes that there is unusual activity in ZBPRA to the upside, rising on heavy volume almost 25%, based on Zion's offer to exchange those shares for common stock. Zions LB notes that it bought those shares at $7.8 (Bought 100 ZBPRA at $7.8), further noting that two dividends have been received so far with another about to be paid, so it was curious whether HK would reconsider LB's dismissal as Head Trader or at least remove from the profile section the reference to ZBPRC. HK responded that it would give the LB another title, Department Head in Charge of Responding to Exchange Offers.

1. Home Sales: The National Association of Realtors reported a 10.1% surge in October's existing home sales. Existing Sales activity was at the highest level since February 2007.

2. Regional Bank Stocks: I was reading Jim Cramer's new book (Getting Back to Even) at my local library, Barnes & Noble, and he does make a cogent case for some of the regional bank stocks, at Chapter 6 pp. 140-162. I have elected to monitor just two of the five, and will try to figure out a decent entry point for 50 share purchases in keeping with my strategy in this area. Cramer's theme is that the current situation is analogous to the last major debacle for the banking system circa 1990-1991, primarily known under the rubric of the S & L crisis. Once that was cleaned up at a tidy cost to the taxpayers, several banks emerged as winners, and he discusses one of them Fleet Boston. I have mentioned in the past that, once the garbage was removed, a large number of surviving banks entered a long secular bull market for the banks, lasting from around 1993 to 2007. This can be verified by simply going to YF and pulling up a number of long term charts.

The Old Geezer remembers this period, and cautions that history may not repeat itself. RB came up with idea, and the LB formulated a strategy, and started to implement it back in March to play a possible repeat of history without risking too much of Headknocker's capital. The first prong of the strategy is patience and time. The second is to divide the banks into two categories of risk. The first category is viewed as having the most risk, and my investments in those banks are classified as lottery tickets with a maximum capital exposure of $300. The second category consists of banks viewed as less risky and even with those institutions my capital limit is around $2000. Based on my evaluation of the bank's progress, I may take a buy out of the LT category and place it in the second category. I have already done this with EWBC and WL, both originally classified as LTs and now part of the second category which allows me to increase my investment. I do not intend to do that with EWBC, but may with WL. I will sell a position before five years if I become convinced that the bank is sliding toward oblivion, which has happened once so far with a bank that was later seized by the FDIC, UCBH, and where I took about a $50 loss earlier in the year. Sold UCBH at a Loss/ I expect failures. The trick will be to cut the losers before the loss hurts and allow the others to run. Two of the purchases have already doubled or more in price, with the biggest gainer so far being EWBC followed by WBS. The lottery ticket purchase links which includes the banks can be found in my Gateway Post for all LTs which is one of the posts which I try to update with new links: LOTTERY TICKET PURCHASES: LINKS IN ONE POST

So far, and this post will be continually update with new purchases, I have initiated LT positions which I will just call Category 1 in the following banks:

Category 1: Less than $300 : All Stocks in this Category Sold or Elevated to Category 2 as of 2011

Regions Financial (RF) at $3.47 Lottery Ticket in 50 shares of RF Sold 50 RF @ 6.57 
Key Bank (KEY) at $5.88 Bought 50 KEY-Lottery Ticket SOLD Sold KEY at 8.12
Synovus Financial (SNV) at $3.73 Bought 50 LT SNV at $3.73/ SOLD NEAR BREAK-EVEN 4/22/2010
Susquehanna Bancshares (SUSQ) at $5.85 /Bought 50 SUSQ AS LOTTERY TICKET Sold 50 SUSQ @ 7.5
Marshall & Ilsley (MI) at 5.84 Bought 50 MI at 5.84 Sold: 50 MI at 7.14
Bank Mutual (BKMU) at 5.51 Bought 50 BKMU at 5.51 Sold BKMU at 5.93
Sterling Bancshares (SBIB) at $4.63 Bought 40 SBIB Sold SBIB @5.6
Bank of Commerce (BOCH) at 4.46 Bought 50 BOCH at 4.46 Sold BOCH at 3.8
Summit State Bank (SSBI) at 6.3 Bought 50 SSBI at 6.3 Sold: SSBI@ 6.77
Enterprise Financial Services (EFSC) Bought 30 EFSC at 8.48 Sold 30 EFSC @ 8.97

Category 2 $300 to $2000- RAISED TO $3000 FALL OF 2010; Raised to $5000 in 2014

BOLD Names=Currently Owned 

Access National (ANCX): Bought 50 ANCX Sold 50 ANCX at $14.9 

American National Bankshares (AMNB): Bought 50 AMNB at $21.16 Sold 50 AMNB at $23.03  Bought:  50 AMNB at $22.07

Bank of South Carolina (BKSC):  Bought 50 BKSC at $14.6 Regional Bank Basket

Bar Harbor Bankshares (BHB) Bought 50 BHB at $30 (stock underwent 3 for 2 split after purchase) Added to BHB at $26.34

BCB Bancorp (BCBP) Bought 50 BCBP at 9 Rounded BCBP to 100 at 7.5 Bought 50 BCBP @ 8.82 Sold: 150 BCBP @ 9.4

Berkshire Hills Bancorp (BHLB) Bought 50 BHLB AT $21.66 Sold 50 BHLB at $28.74+ Bought: 50 BHLB at $24.51 Added 50 BHLB at $23.75 Sold  50 BHLB at $25.75 

BOFI Holdings (BOFI) Bought 50 BOFI at 11.84 Sold: 50 BOFI @ 12.66

Boston Private Financial (BPFH): Bought: 50 BPFH at $12.35

Bridge Bancorp (BDGE) Bought 50 BDGE at 23.11  Bought: 50 BDGE @ 22.14 BOUGHT 50 BDGE AT $18 Sold 50 BDGE at $23.5 Bought Back 50 BDGE at $19.65 Sold 50 BDGE at $23.01 Added 50 BDGE at $20.76 Pared BDGE Selling Highest Cost 56 Shares at $24.71

Brookline Bancorp  (BRKL) Added 70 BRKL at 8.45 Bought 30 BRKL at 9.06 Sold 101+ BRKL at $8.23 Bought 100 BRKL at $8.48 Sold 101+ BRKL at $9.53 

Citizens Holding (CIZN) Bought  50 CIZN @ 18.7  Bought: 50 CIZN @ 18.25 SOLD 100 CIZN @ 20.56  Bought Back 50 CIZN at $18.76-Regional Bank Strategy Averaged Down: Added 50 CIZN at $17.62
Citizens & Northern (CZNC) Bought 50 CZNC at 11.77 Added 50 CZNC at 10.46 Sold 100 CZNC at 16.53  Bought 50 CZNC at $19.15 Bought  50 CZNC at $18.5 Sold 100 CZNE at $19.52 

CNB Financial (CCNE) Bought 50 CCNE at 11.06 Added 50 CCNE at $16.11 Regional Bank Basket Strategy: Added 100 CCNE At $17 - South Gent | Seeking Alpha

Community Bank System (CBU) Bought 50 CBU @ 23.18  Added 50 CBU @ 25.19 Sold 51+ CBU at $26.82 

CVB Financial (CVBF) at 7.94 Bought CVBF  Sold 50 CVBF at 9.65

EAST WEST (EWBC) (originally in Category 1) at $5.7 Buy of 50 EWBC SOLD 50 EWBC at $19.04

Enterprise Bancorp (EBTC) Bought 50 EBTC at 11.75 Added 50 EBTC at 10.33 Bought 50 EBTC at 11.27  Sold   50 EBTC @ 13  Sold 100 EBTC at $15.95 

KeyCorp (KEY)(promoted from LT category) Added 70 KEY at $8.77 (and removed 30 shares from LT Category 10/4/12); Bought 30 KEY at 8.75Added 40 KEY at $7.87 Sold: 140 KEY at $11.8025  

Lakeland Bancorp (LBAI): Bought 100 LBAI at $9.46 Sold 100 LBAI at $11.04 Lakeland Bancorp: Bought 100 LBAI at $10.91

Landmark Bancorp (LARK) Bought 50 LARK @ 16.6 SOLD 52 LARK at $18.75 Bought  50 LARK at $19.7-Sold 50 LARK at $23.5  Bought 50 LARK at $19.76 Sold 50 LARK at $22.42 

Merchants Bancshares (MBVT) Bought 50 MBVT at 22.9  SOLD 50 MBVT at 26.5 Bought 50 MBVT at $26.25 

Monarch Financial (MNRK): Bought 120 MNRK at $8.65 (split 6 for 5); Sold 100 MNRK at $10.59  Bought 80 MNRK at $9.97 Sold 100 MNRK at $11.5

National Bankshares (NKSH): Bought 50 NKSH at $30.4

National Penn Bancshares (NPBC): Added 100 NPBC at $10.68 Added 50 NPBC at $9.85 Added 50 NPBC at $10.12

NBT Bancorp (NBTB) Bought:  50 NBTB at $22.76

New Alliance (NAL) at 11.76 Bought NAL at 11.76 Sold 50 NAL at 12.7

New Hampshire Thrift (NHTB) at 9.51 Bought 100 NHTB at $9.51  Sold 100 NHTB at $12.15 

New York Community Bank  Bought 50 NYB at $11.3 50 NYB at 10.9 50 NYB at $11 Added 50 NYB at $10.57 Sold NYB in IRA at $17.51 Added 50 NYB at $12.79  Bought 50 NYCB at $12.94-Regular IRA Sold: 50 NYCB at $14.25 

Northeast Bancorp Bought 100 NBN at $8.7 Sold 100 NBN at $9.5 

Northrim BanCorp (NRIM) Bought 50 NRIM at $16.66  Sold 50 NRIM at 20.05 

OceanFirst (OCFC) at 10.4 Bought 50 OCFC at 10.4  Sold OCFC at $12.45 

Old National Bancorp (ONB) Bought 100 ONB at $11.85 SOLD 100 ONB at $13 Bought Back 50 ONB at $11.9  Sold 50 ONB at $14.12  Bought 50 ONB at $13.29

Oneida Financial (ONFC) Bought 50 ONFC at $7.7  Sold 50+ ONFC at $9.35  

Oritani Financial (ORIT)  Bought 50 ORIT @ 11.58 Sold:  50 ORIT @ 12.49

Pacific Continental (PCBK)(promoted from LT Category) Added 70 PCBK AT $9 (and removed 30 shares from the LT Category 10/19/12 Bought 30 PCBK as LT at 9.42 Sold PCBK at $12.99 

People's United (PBCT) Bought 100 PBCT at $11.47  Sold 100 PBCT at $14.61 

Porter Bancorp (PBIB) Bought 50 PBIB at 14.1/ Sold 50 PBIB at 14.7 Bought 50PBIB at $14.1 Bought 50 PBIB at 13.27  Sold 1/2 PBIB at $10.18  for a Loss  

Premier Financial (PFBI) Bought 50 PFBI at 7.95 Sold 50 PFBI at 6.46

Southwest Bancorp (OKSB) Bought 50 OKSB at 6.84 Sold 50 OKSB at 13.19

Sterling Bank (STL) at 6.58 Bought 50 STL at 6.58  Sold STL at 10.5 BOUGHT 88 STL AT $8.98  Added 112 STL at $8.69

Susquehanna Bancshares (SUSQ): Bought  100 SUSQ at $10.15  Sold SUSQ: 100 at $13.2 

S.Y. Bancorp (SYBT): Bought 50 SYBT at $21.84 SOLD 50 SYBT at 24.31 Bought 50 SYBT at $22.16  Sold 50 SYBT at $26.2 

Tower Bancorp (TOBC) Bought 40 TOBC at 21.35 Bought: 60 TOBC at 21.75 Sold 100 TOBC at 23.12 (acquired by SUSQ)

TrustCo (TRST)  Bought 50 TRST at 6.3 Added 70 TRST at 5.9 Bought 50 TRST at 5.45 Added 50 TRST @ 5.48 Added 100 TRST at 5.94  Bought 50 TRST at $4.01 ADDED 50 TRST at $5.1 Added 150 TRST at $5.17 (Bought 50 at $5.65 5/20/11-not discussed) Sold 308 TRST at $6.64 Sold 315+ TRST at $6.92 

Trustmark (TRMK) Bought 50 TRMK at 19.57 Sold 50 TRMK at 24.7 Bought 50 TRMK at $21.54  Sold 50 Trustmark at $26.52 Bought: 50 TRMK at $22.73 Item # 1 Sold Taxable Accounts: 50+ TRMK at $24.63 (7/19/14 Post) Item # Bought 100 TRMK at $23.12 (8/9/14) Sold 100 TRMK at $24.45  Bought Back TRMK at $22.25-Regional Bank Basket Strategy

Umpqua Holdings (UMPQ) Bought 50 UMPQ at $12.05  Sold 50 UMPQ at $16.12 

Union Bankshares (UNB) Bought 50 UNB at 18 Sold 50 UNB at 19.5 Bought 50 UNB at $19.45 Sold 50 UNB at $24.56 

United Bancorp (UBCP) Bought 50 UBCP at $8.49 Bought 50 UBCP @ 8.13 Bought 50 UBCP at 7.99  Sold 50 UBCP at $10.05  Added 50 to at $8.08

United Bankshares (UBSI) at 16.65 Bought 50 of UBSI

Univest: Bought 50 UVSP at $15.1  Sold UVSP at $20.5 Bought  50 UVSP at $18.8

Valley National (VLY) Bought 50 VLY at $15.06 /Added 50 VLY at 16.6 (5% stock div 5/2010)Bought 55 VLY at 13.24 Bought 40 VLY 12.61 (5% stock dividend 5/2011) Bought 40 VLY at 10.58

Wainwright Bank (WAIN) Bought 50 WAIN at 8.72 SOLD 50 Wain at $18.7-Being Acquired

Washington Banking (WBCO): Bought 100 WBCO at $13.46 Added 50 WBCO at $13.3 Sold 151+ WBCO at $15 

Washington Trust (WASH) Bought 100 WASH at $15.26  Sold 50 of 100 WASH @ 22.44 

Webster Financial (WBS) at $4.58 Buy of 50 WBS: Lottery Ticket Elevated out of Category 1 in 2010  Sold 50 WBS at 22.49 

WesBanco (WSBC) Bought 50 WSBC at 13.3  Sold 50 WSBC @ 20.01 

West Bancorp (WTBA): Bought 100 WTBA at $11.67

Wilbur (GIW) Bought 100 GIW at 7.03 Added 50 GIW at 6.55 Sold 151 GIW @ 9.26 (acquired by CBU)

Wilmington Trust (WL) (originally in Category 1) at $9.98 & 12.36 BOUGHT 30 WL /Added to WL 12.36  Sold 100 Wilmington Trust (WL) at $14.13

A more recent discussion of this strategy can be found at REGIONAL BANK BASKET STRATEGY GATEWAY POST, where I will be providing snapshots of the gains/losses, provide a running total of the net realized gains and the total amount of dividends received on an annual basis. 

3. 10 Dividend Stocks Recommended by Barrons : The Barron's web site was down most of Sunday, and I was not able to read most of the articles in the magazine, including the one just about AT & T until this morning. For those who do not have access to Barrons, which is subscription based, this article in Reuters summarizes the 10 dividend stocks recommended in this week's issue and this article summarizes the story about AT & T- Reuters. I subscribe to both the online editions of Barron's and the Wall Street Journal which costs somewhere around $160 per year, with about $49 of that for Barron's. The Barron's article about AT & T (own common and bonds) is generally positive, while acknowledging that the end to exclusivity on the IPhone will be a negative for AT & T and a positive for Verizon. Barrons

4. Howard Dean's Memory Lapses: Howard Dean claimed recently that the Democrats pushed Medicare in 1964 and Social Security in 1935 without Republican support until the very end "when they realized they had to get on board". This did not square with my memory. Both Medicare and Social Security had substantial support within the Democratic party, and were initiated by Democrat Presidents. And, to be sure, most of the opposition came from members of the Republican party. But the GOP had not been kidnapped by the American Taliban movement, which is a recent phenomenon, occurring gradually after Reagan's presidency. There were many Republicans, particularly from the Northeast, who would be viewed as liberal or moderates by the mainstream GOP voter today, who would work tirelessly to defeat them in a primary if any of them were still around. Now, those individuals are gone from the party, and there is no longer a single Republican congressman from New England. So Politifact rated the Dean statement as false. PolitiFact Although no house republican supported social security until it reached the House floor, 81 House republicans did vote for final passage of Social Security (Vote tallies on 1935 law) and 70 voted for Medicare. Only 13 Republican senators voted for the passage of Medicare. In both 1935 and 1965, as now, the Democrats were the majority party with one of their own in the White House, and enjoyed solid majorities in both houses of Congress.

The public perception, possibly embedded by years of Democrat campaign commercials, is that the GOP opposed Social Security and Medicare, and that is an incorrect perception. A number of prominent members of the GOP opposed Medicare and called it socialism, including many who were prominent within the party. Investments for Unexpected Inflation/ Jesus & the Prosperity Gospel/More on Sarah and her Death Panels/
But those programs also had significant support within the old GOP at the time of their passage.

It does not appear likely that there will be any GOP support for the Democrats' latest health "reform" legislation, possibly a few votes. Over the short term, I suspect that this united opposition will be beneficial to the GOP. If the Democrats succeed in passing a bill similar to the one being debated now in the Senate, and it becomes anywhere near as popular as Medicare, then in the longer term the GOP's unanimous no will turn into a negative, and Democrat campaign commercials could accurately convey the GOP's hostility to the program. Over the years, I think the Democrats have frequently mislead the public in their commercials when discussing a GOP candidate and social security. I focused in October 2008 on one such commercial from the Obama campaign. Trust Certificate JZJ AT & T BOND The Whoppers of 2008

5. Sarah Queen of Gibberish: Maureen Dowd quotes a passage from Sarah's interview with the fawning Bill O'Reilly, referring to Sarah's Yoda syntax. NYT I listen to Sarah and frequently say to myself, what did the Queen of Gibberish just say. I thought that Maureen was being most unfair to Yoda.

6. LionsGate (owned-Lottery Ticket category): The movie "Precious" expanded from limited release to wide release, showing in 629 theaters over the weekend. The estimated gross starting last Friday through Sunday was 11 million, or around $17,500 per theater. Apparently, investors are not impressed with that result as LGF continues to slide, trading around $5 in early trading today. More information about LGF's upcoming movie releases can be found at LIONSGATE.

7. Elizabeth MacDonald & Forbes Join Limbaugh and Beck on Health Care Rationing Scare-Emblematic of the Ongoing Problem of Divorcing Demand for Service and the Responsibility to Pay for It: I was listening to Forbes on Fox Saturday, and I heard Elizabeth MacDonald claim that Great Britain, with its national health care system, denied treatment for cancer, MS and virtually every major illness that her brain could then remember Media Matters for America Maybe Ms. MacDonald is suffering from that TB illness called hyperbole, a common affliction. So if I understand the argument, if the Democrats succeed in passing their health bill with a public option, those without health insurance would be worse off. It is also interesting to me that the so-called conservatives want unlimited access to health care with no cost controls which they call rationing to give it a pejorative connotation, basically turning healthcare access into an unlimited constitutional right without regard to costs and effectiveness of treatment. It is hard to see that view as the conservative one, more like what you would expect from liberals of the irresponsible persuasion.

A less hysterical view of Great Britain's health care system is in this article published in the this Wikipedia article and this more general article from the The New Yorker. Every health care system rations healthcare, as that term is being used in discussions today, and that would be apparent to those who have had coverage issues with HMOs and private insurance plans in the U.S. We Already Have Health-Care Rationing in U.S | And healthcare is already rationed in the U.S. based on ability to pay.

When you listen to the TBs and their publicists at Fox, one fact which escapes their attention is that Medicare is a government run insurance plan, and one is hard pressed to find "rationing" in that system. In fact, the government is barred by law from making any decisions based on cost and the result, as made clear in a 60 minutes segment last night will be spiraling out of control costs. 60 Minutes - CBS News The bottom line is that the U.S. will spend and borrow itself into financial ruin, probably though not in my lifetime but within fifty years. For spending on healthcare, just part of the overall problem, the underlying cause is that demand for healthcare has been completely divorced from any responsibility to pay for it, primarily through government and private medical insurance. So, for example, if a Medicare patient wants a cancer drug which possibly may prolong life for a month or two, and costs $50,000 a month, they have a right to have it at the expense of the government. Or as shown in the 60 minutes program, a patient has the right to receive expensive treatment in an ICU at the end of life, rather than dying in peace at home or in a hospice, and taxpayers have an obligation to pay for that individual decision. Any change in that system is called rationing, or the creation of "death panels" by those who pretend to be concerned about federal spending but frequently make it impossible to control it.

One reason that I oppose the Democrats' health "reform" is that it will create more demand for medical services without any restraint or consideration on the costs of providing that service, or any meaningful attempt to relate cost with effectiveness of treatment or the improvement in the patients health or prospects for recovery. It will be more of the same so the critics miss the point. In the end, it will become another bottomless pit like Medicare because there are no meaningful cost controls.

8. Tidbits: DKR, the TC with the senior Hertz bond, goes ex interest today for its semi-annual interest payment. The shares were bought at $6.45 (DKR) , and this will constitute the third payment since the purchase of those shares. DKR Stock Quote - Saturns Hertz Corp Ser 2003- UNIT A 7% 2012

The NYT has an article that makes some obvious points: the interest rates paid to finance the national debt are abnormally low, the debt is ballooning at an unprecedented speed, the government has to constantly refinance the debt and the low rates will eventually end as financial conditions improve. It is not hard to predict now that the nation will be paying more than a trillion dollars a year to service its debt due to a combination of those factors in the not too distant future. Prior to the downturn in rates, the interest expense for fiscal year 2008, ending in September 2008, was 451.154 billion dollars. Government - Interest Expense on the Debt Outstanding Both parties are responsible for this inevitable, and brewing disaster, but ultimately it is the responsibility of the American people as a collective who have been conditioned to expect services as their birthright without having to pay anywhere near the full cost.

It is estimated that 42% of the 25 billion dollars in outstanding condo construction loans were delinquent in the 3rd quarter. NYT Apparently, some of the Wall Street bankers funded this disaster based on the premise that everyone else was doing it so it must be smart. As I have said in the past, never before in the history of mankind has there been another group of people who were paid so much to be doofuses. Masters of Disaster-Talented?

9. Campbell Soup (owned): Campbell reported earnings for its 1st quarter at 87 cents per share, excluding items, which was six cents better than the consensus estimate, and CPB raised its fiscal 2010 EPS growth and sales levels. The shares currently owned were bought at $25.35. CPB Buys of CPB LQD SYY XKK Sales decreased 2%. Currency added 1%. Volume and mix subtracted 4%. The weakness in the dollar is starting to add to results. I have mixed opinions about continuing to hold CPB, but I do not need anymore cash earning zero in a money market account. So, for now, as long as the dividend continues to be raised, and I have a low fixed cost, I will probably keep the shares.

Unlike other consumer staple stocks bought in March, like Coca Cola and Sysco, Campbell Soup does not have a history of dividend growth. The VL data shows that dividends were increased from 1993 to 2000, moving from 46 cents to 90 cents, which is what I like to see. Then, CPB ran into some trouble and cut its dividend to 63 cents in 2002, and the stock slid from a high of $62.9 in 1998 to a low of $19.7 in 2002. CPB started to raise the dividend from this reduced level in 2004, and by 2009 the annual dividend exceeded the the amount in 2001. In my classification system, this is an inconsistent and unreliable pattern of dividend growth. Possibly CPB will continue to increase the dividend for years to come, but I give it less credence on that score than I would a KO, SYY or many other consumer staple companies based on CPB's prior history which I will never disregard. CPB did just raise its quarterly dividend by 10% to 27.5 cents.

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