How To Start Investing In Small Banks
Deep Value Investor Tim Melvin says that price and relationship to value is the most important thing to consider when investing in small banks.
Melvin is a Marketfy Maven and the author of the Tim Melvin Deep Value Letter. He recently joined Benzinga’s #PreMarket Prep to offer some advice for people who want to starting investing in small banks.
Melvin said he wants to buy at around 80 percent tangible book value, and advised that investors need to be careful about a bank’s loan portfolio and don’t want to see non-performing assets over 2 percent most of the time. Investors also want to be sure that the entity has plenty of capital, he explained.
“if you’re going to start doing this, be aware: it consumes a lot of time,” Melvin said. “These are not going to be talked about on too many of the financial news networks. You’re not going to get a lot of press coverage.”
Because of the that, Melvin explained that investors will have to learn to dig into Securities and Exchange Commission filings, as well as those from the Federal Deposit Insurance Corporation.
oh look. Another bank takeover. BBT buying SUSQ at 30% premium.
— Tim Melvin (@timmelvin) November 12, 2014
“But every second will be paid back in spades,” Melvin said.
His preferred method is to go by the numbers: read the filings, review the portfolios and go through the call report data.
Melvin also talked about activist investors he’s following and why he likes 13F season.
Check out his full interview here:
Don’t forget to tune in to Benzinga’s #PreMarket Prep broadcast Monday-Friday 8-9:45 a.m. ET for a live, interactive morning show with veteran traders and featured finance industry experts ready to answer your questions for the trading day.
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