Banking Pool

Intrinsic Value of Bank Stocks

“It is well enough that people of the nation do not understand our banking and monetary system, for if they did, I believe there would be a revolution before tomorrow morning.” – Henry Ford

The third pool of similar investments used with the Investment Fund is banking. Banking is a highly regulated industry, governed by the Federal Reserve, and thinly capitalized in comparison to other industries. The balance sheet is strongly weighted with current assets and liabilities. It is rare for the stock to trade at more than 1.5 times traditional book value. The top three key performance indicators are 1) the spread between interest earned and interest paid; 2) revenue from non-interest sources; and 3) the quality of the loans issued.

There is different tack taken with reading and interpreting a bank’s set of financial statements. The articles that follow in this area explain the respective interpretations of financial reports; how to key in on important bits of information; and how to properly set the buy and sell points for the respective member stocks.

The key advantage of bank stocks is the increased volatility of the stock’s price. In general, the stock’s price for banks vacillates at a higher frequency than the other two pools of the Club’s Investment Fund. This allows for short-term opportunities to fill the voids when holding cash. There is an in-depth explanation of this business principle in the articles below.

In order to access the articles, models, spreadsheets and tutorials related to the banking pool, you must be a member of the Value Investment Club. To join, go to the Membership page on this site (located in the value investing tab in the main menu above).

Value Investing Episode 1 – Introduction and Membership Program

Below are articles related to the banking pool. Only the excerpts are available to non-members. Full access to the respective article requires membership status.

  • Sold Comerica Bank – Earned 18.38% in 35 Days!

    Sold Comerica Bank - Earned 18.38% in 35 Days!
    Today, Comerica’s stock price hit the sell point in accordance with the buy/sell model for Comerica Bank. At the market’s opening this morning, January 14, 2021, the stock quickly jumped past $65 per share. The order to sell is set at $65 per share. Total proceeds net of $1 per share transaction fees was $23,677.40. ...
  • Purchased 292.0560 Shares Wells Fargo Bank

    Purchased 292.0560 Shares Wells Fargo Bank
    With a tangible book value of approximately $33 per share and a current market price of $33.24 per share, the Banking Pool diversified its portfolio and purchased 292.056 shares of Wells Fargo Bank this morning. The company is due to report its quarter results later this week.  Including a transaction fee of $1 per share, the ...
  • Value Investment Fund Buys 369.9593 Shares of Comerica Bank

    Value Investment Fund Buys 369.9593 Shares of Comerica Bank
    The value investment fund’s banking pool includes Comerica Bank. Based on the investment’s buy/sell model, this morning prior to opening, an order for 369.9593 shares at $53.06 was entered. Including the cost of $1.00 per share, total investment is $20,000. The preset sell price is now set at $65.00. Based on historical information, it is believed ...

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