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Small Bank Newsletter
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January 2005
- ATLANTIC LIBERTY FINANCIAL (ALFC $21) is
the holding company for Atlantic Liberty Savings which came public
at the end of 2002 at $10 a share. The stock opened that year
just under $14 a share and has headed north ever since. Total
assets up to $185 million and loans up to $120 million at 9/30/04.
Loan growth is ok at 5.7%, but in their red hot markets, it should
be closer to 15%+. First the good: Loan quality is good, net
interest margins are also good at 3.68%. They have undervalued
real estate on their books that is not included in their current
book value of $16.25+ and its still going up in value every year,
so it is really around a $20+ book value. Hence, the stock is
trading near book value. While it is not worth more than 1.5
times book, that’s still a 50% move up, someday, when they
get taken out which should happen next year? Insiders have been
buying the stock for a while, another good sign of good things
to come. Management pays themselves very handsomely to run a
bank of this size with little growth (several million in salaries
to the top few guys), so there is plenty of costs to cut and
for a sharp move up in earnings for any acquirer. They have only
1.68 million shares outstanding. The stock trades plenty every
once in a while so be patient buying it. They are headquartered
in Brooklyn, N.Y. Downside risk is very low at around $20 a share
and $30+ upside is again as good as it gets in this market. Accumulate
now under $22 and buy all you can under $21.
FOLLOW UPS:
- GFSB BANCORP (GUPB) being taken by a private
bank (which is going on the NASDAQ very soon) for around $22
share is our guess, but it could be higher. The banks have not
put out all information yet on the deal. Hold for $26.
- GB&T BANCSHARES (GBTB) sold 1.3 million
shares at $23. Wow. Fully priced over $26.50. Sell. What a ride.
- NBC CAPITAL CORP (NBY) start selling now
over $28 for 20% + in just over a year.
- WILSHIRE BANK (WIBC) they are paying a 2
for 1 stock split very soon. We would continue to use this one
as a hedge and to trade this one on the “short” side
only over $35, simply a bubble here.
- COMMUNITY BANK OF NEVADA (CBON) opened near
$28 after they raised the offering price to $23. Speculative
accounts buy up to $29, but for a trade only, and start selling
over $33 and sell all at $37 if it gets there. While it is not
bargain at these prices, everyone wants in. With limited shares
to buy, it could pop to $35 in a month or two, and we would say
thank you and bye/bye. There are over 6.2 million shares out
there now, that’s a lot. This one is not the same as VLLY
which you can hold for the long-run . Could this be the
top? Time will tell.
2004 looks to end very, very strong with November and December
the best months of the year, FBHC, VLLY, NBY, ACFC, KFED, HIB ,
GBTB , RMGC, AF, ICBC all continue to trade higher. Our returns
look to be around 2-3 times higher than what we hade thought for
2004. 2005 should be a solid year with 5-15% returns (maybe 20%+),
lower downside risk than 2004, 5% -9% downside- risk in 2005, but
higher volatility will continue. We don’t like that (makes
our job very hard).
ICBC($41.20) could be the next one to sell, they have
put themselves on the market for sale and we think they are serious
and that they could fetch $47 a share, but
Downside is 10% + if nothing happens or if we get a sharp
over-all market sell-off.
As always, you may call me with any questions on any stock. This
is a free service to our subscribers.
To contact Douglas Hughes via email - dhughes33@charter.net
Personal Account Management: Bank Stock Portfolios.1.25%-1.75% FEE.
$1,000,000 Minimum. Douglas Hughes Hughes Investment Management. 1-888-814-7575.
The Small Bank Newsletter is published 12 times a year. (To
Subscribe: 1-888-814-7575).
- Douglas Hughes -- Small Bank Newsletter, Hughes Investment Management
, can and does take positions, in stocks it recommends.All material
Copyright© 1995-2003 by Douglas Hughes. Reproduction of this
publication in whole or in part is strictly forbidden.
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