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Chasing Value: Financials risky but up 26%

Sheldon Liber — Wed, 03 Sep 2008 14:15:00 EST

Filed under: Major Movement, Good news, Competitive Strategy, Citigroup Inc. (C), Merrill Lynch (MER), Wachovia Corp (WB), Washington Mutual (WM), Bargain Stocks, Chasing Value[TM], Lehman Br Holdings (LEH), Newcastle Investment (NCT), MBIA Inc (MBI), Gramercy Capital (GKK), E*TRADE (ETFC), East West Bancorp (EWBC)

It has been five weeks since I posted Serious Money: Tempting fate with 10 financials. The results of buying into the following pool of financial stocks at a time when the "hate 'em" factor was at a peak has been tremendous. The over all return has has been 26.3% with eight stocks up and two down.

For investors this might have been too speculative; for traders, they are probably grinning from ear to ear. For me -- we will see where we stand next year. As one of my colleagues reminded me, this is the real test, although I think there is reason for optimism.

The leader of the pack was MBIA Inc (NYSE: MBI), up 228%. In the absence of that gain the appreciation would have only been 3.5%. That beats all the indices but is not as dramatic.

Citigroup Inc. (NYSE: C) -- $18.45 down 63% from its 52 week high of $49.90; closed yesterday at $19.11, UP 3.57%
Lehman Br Holdings (NYSE: LEH) -- $16.88 down 75% from its 52 week high of $67.73; closed yesterday at $16.13, down 4.44%
Merrill Lynch (NYSE: MER) -- $26.25 down 67% from its 52 week high of $79.72; closed yesterday at $27.75, UP 5.7%.
MBIA Inc (NYSE: MBI) -- $4.92 down 93% from its 52 week high of $68.98; closed yesterday at $16.14, UP 228%.
E*TRADE (NASDAQ: ETFC) -- $3.06 down 84% from its 52 week high of $19.39; closed yesterday at $3.25, UP 6.2.
East West Bancorp (NASDAQ: EWBC) -- $12.46 down 67% from its 52 week high of $20.88; closed yesterday at $13.01, UP 4.4%.
Gramercy Capital (NYSE: GKK) -- $6.72 down 77% from its 52 week high of $29.45; closed yesterday at $6.80, UP 1.2%.
Newcastle Investment (NYSE: NCT) -- $5.88 down 72% from its 52 week high of $20.88; closed yesterday at $6.89, UP 17.18%.
Wachovia Corp. (NYSE: WB) -- $15.70 down 70% from its 52 week high of $53.10; closed yesterday at $16.65, UP 6%.
Washington Mutual (NYSE: WM) -- $4.43 down 89% from its 52 week high of $39.48; closed yesterday at $4.24, down 4.29%

In my original post I emphasized that you had to buy the pool for safety. During the last month, we have seen many stories about Lehman Brothers' demise or the collapse of a major bank like WaMu or Wachovia, and if that had happened the gains in MBIA would have made up for the total and complete collapse of any one of them. I have no reason to believe this is immanent. I do have reason to believe the opposite. During the last month I bought additional shares of WaMu, one of the two down stocks at $3.50 per share.

Sheldon Liber is the CEO of a small private investment company and the principal for design and research at an architecture & planning firm. He writes the columns Chasing Value and Serious Money. Disclosure: I own shares of MBI, NCT & WM.

Chasing Value: Financials risky but up 26% originally appeared on BloggingStocks on Wed, 03 Sep 2008 14:15:00 EST. Please see our terms for use of feeds.

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Serious Money: Wisdom or folly -- 10 financials updated

Sheldon Liber — Fri, 08 Aug 2008 13:12:00 EST

Filed under: Citigroup Inc. (C), Merrill Lynch (MER), Wachovia Corp (WB), Washington Mutual (WM), Lehman Br Holdings (LEH), Newcastle Investment (NCT), MBIA Inc (MBI), Gramercy Capital (GKK), E*TRADE (ETFC), East West Bancorp (EWBC)

Yesterday the Dow Jones Industrial Average was down 225, so I decided to peg the financial stocks I wrote about investing in as a pool. We are often accused of bragging on the good days and having memory loss on the bad so I wanted to be transparent and forthright on the downside.

To my surprise the financial stock pool is actually up 9.96% on average. Six stocks increased in value, two were down and two stocks were even money. The big winner was MBIA Inc (NYSE: MBI) up over 68%!

In the same time frame the DJIA has gone from 11,397.56 to 11,431.43 (even) and the S&P has gone from 1263.2 to 1266.06 last night, for basically no change either.

The market is rebounding as I write so I expect the news is even better. Although, this pool of stocks beat the market so far in the short run, I hope to track this group for a year, or at least until Major League Baseball's spring training opens in 2009.

If you want to track the story with me the first post was Serious Money: 10 finance stocks as the market bounces. I remain stubbornly optimistic that this is a buying opportunity and investors will be sorry they did not have the courage to buy stocks when they were hated. The follow-up was Serious Money: Tempting fate with 10 financials

The initial prices are as of July 29, 2008.

Continue reading Serious Money: Wisdom or folly -- 10 financials updated

Serious Money: Wisdom or folly -- 10 financials updated originally appeared on BloggingStocks on Fri, 08 Aug 2008 13:12:00 EST. Please see our terms for use of feeds.

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Serious Money: 10 finance stocks as the market bounces

Sheldon Liber — Tue, 29 Jul 2008 18:02:00 EST

Filed under: Major Movement, Rants and Raves, Berkshire Hathaway (BRK.A), Market Matters, Citigroup Inc. (C), Money and Finance Today, Merrill Lynch (MER), Serious Money, DJIA, Lehman Br Holdings (LEH), Stocks to Buy, MBIA Inc (MBI)

Today the Dow Jones Industrial Average bounced back from yesterday's poor showing. It ended the trading day at 11,397.56, that's plus 266.48 (+2.39%) returning more than it had lost only 24 hours ago.

There are plenty of prognosticators explaining why this happened and so I am not going to join the crowd this afternoon with my own version. Leave it to say we are in a period of uncertainty where investors and traders alike are a bit jumpy. We did have a 5.4 magnitude earthquake today in Southern California, only fitting for this type of market.

In the meantime I have been wondering how to take advantage of the lousy situation in the financial sector of the market. How can I maximize my gains and control risk at the same time? I guess we are all trying to do this, but few will appreciate my contrarian, 'no guts no glory' approach.

I think you have to be buying banks and investment companies and I have decided that ten is the right number. Sir John Templeton (RIP) is the catalyst for this notion. I am already on record (Serious Money: More signs the market has bottomed) that this is the time to be selectively buying and 'my pal Warren' said as much at the Berkshire Hathaway (NYSE: BRK.A) annual meeting when he suggested the financials have seen the worst of the storm.

Continue reading Serious Money: 10 finance stocks as the market bounces

Serious Money: 10 finance stocks as the market bounces originally appeared on BloggingStocks on Tue, 29 Jul 2008 18:02:00 EST. Please see our terms for use of feeds.

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Will Bush throw a change-up at Yankee Stadium?

Sheldon Liber — Tue, 15 Jul 2008 14:45:00 EST

Filed under: Other Issues, Rants and Raves, JPMorgan Chase (JPM), Charles Schwab Corp (SCHW), Merrill Lynch (MER), Southwest Airlines (LUV), Wells Fargo (WFC), Politics, Presidential Elections, Commodities, Lehman Br Holdings (LEH), Federal Reserve, Recession

There are many ironies in the fact that President George W. Bush will throw the first pitch at Major League Baseball's All-Star Game in New York. For one, President Bush is the first managing general partner of a Major League team (the Texas Rangers) to become President of the United States.

President Franklin Roosevelt was the first to attend an All-Star Game and throw out the first pitch, starting the tradition. He too had to deal with a poor economy and by the time he threw out that first ball the groundwork was being laid for World War II. President Bush has had to contend with his own war.

While there are differing views as to whether we should have gone into Iraq and whether we should stay or get out, this will always be viewed as George's war, fair or not. And the state of our economy in 2008 will also be viewed as George's economy, fair or not.

The ultimate irony for me is that Yankee Stadium is scheduled to be torn apart at the end of the season. This is YANKEE Stadium and the last president to set foot in it will be George W. Bush. The stadium with the greatest heritage in baseball, the 'House That Ruth Built', is going to be torn apart while our economy is also being torn apart. It is being torn out at its roots.

Continue reading Will Bush throw a change-up at Yankee Stadium?

Will Bush throw a change-up at Yankee Stadium? originally appeared on BloggingStocks on Tue, 15 Jul 2008 14:45:00 EST. Please see our terms for use of feeds.

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