This post is part of a special annual report -- Top Stock Picks '09 -- in which TheStockAdvisors.com asked 75 leading newsletter advisors to select their favorite investment for the new year.
"Right now we need to start doing what Uncle Sam is doing -- buying preferred shares of solid banks," says Neil George in By George. Here's a look at First Banks 8.15% preferred A (NYSE: FBS-A).
"The major response to the credit and market bubble's popping is of course the Troubled Asset Relief Program, or TARP.
"The legislation authorizes the U.S. Treasury to be able to spend taxpayer funds on pretty much anything deemed to be helpful at getting the economy and markets working again.
"Over the coming years -- hundreds of billions of dollars have been allocated with more available initially and ostensibly to buy up troubled loans and other credit assets of banks.
"That was the plan -- but as it's been put to work after Congress authorized it -- the Treasury has begun to buy not troubled loans -- but ownership interests in banks as well as now insurance companies and other financials.
"In just the past month or so, 77 banks around the nation have become partially owned by Uncle Sam Inc. through direct investment in preferred shares. And there's more to follow -- as not only is the Treasury investing directly -- but over at the Fed -- Uncle Sam is fully into the lending business.
"The impact of this will be huge. There will be a stream of further consolidation -- directed by Uncle Sam resulting in big gains in banks. Right now we need to start doing what Uncle Sam is doing -- buying preferred shares of solid banks. One of my favorites over the years is First Banks based in Saint Louis.
"A solid family-owned bank that's always shunned risk bought out all of its common stock. Now only issuing preferred. And that's fine with me as the First Banks 8.15% preferred offers a yield of over 13% and should be bought just like as Uncle Sam is doing under 18."
Steven Halpern's TheStockAdvisors.com offers a daily look at the latest market commentary and favorite stock picks and investment ideas from the nation's leading financial newsletter advisors.
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