Bruce Berkowitz, founder of Fairholme Capital Management, has sold half of his stake in one of his financial holdings, Regions Financial (RF, Financial). He cut 63,319,720 shares at $3.60 a share, or a total value of $227,950,992. Regions Financial Corporation is a regional bank holding company and has banking-related mortgage, credit life insurance, leasing and securities subsidiaries in the South, Midwest and Texas. Over the last 10 years, Berkowitz returned 196% compared to the S&P500’s 16.4%. This year, he has 70% of his portfolio in undervalued financial stocks, but his hoped-for economic recovery has not materialized, leaving his fund down 21.5% as of September.
He bought 43,363,404 shares of Regions for an average price of $5.41 a share in the fourth quarter of 2009. He added 32,452,110 more in the next quarter at an average price of $6.73. He initially made a profit, selling portions in the next two quarters when the price rose. When the stock backtracked to $6.47 in the fourth quarter of 2010, he bought 52,730,800 more shares. He trimmed some of the holding in the next two quarters when the price advanced slightly.
Year to date, Regions Financial stock is down 45%, suffering particularly in August and September. It trades for $3.85 on Wednesday, after trading above $30 in the years leading up to the financial crisis.
Regions Financial’s revenues have weakened each year since 2007. The Federal Deposit Insurance Corporation has said that banking institutions have posted weaker revenue but higher profits recently due to stronger balance sheets and better capital positions. Banks it insures posted $28.8 billion in net income from April to June, a 38% increase.
The Paragon Report said in September that Regions’ is benefiting from “improving credit which allows them to release loan loss provisions to earnings” and its “loan-loss provisions were reduced to $398 million from $651 million a year earlier. Net charge-offs were 2.71 percent of average loans, compared with 3 percent a year ago.”
He bought 43,363,404 shares of Regions for an average price of $5.41 a share in the fourth quarter of 2009. He added 32,452,110 more in the next quarter at an average price of $6.73. He initially made a profit, selling portions in the next two quarters when the price rose. When the stock backtracked to $6.47 in the fourth quarter of 2010, he bought 52,730,800 more shares. He trimmed some of the holding in the next two quarters when the price advanced slightly.
Year to date, Regions Financial stock is down 45%, suffering particularly in August and September. It trades for $3.85 on Wednesday, after trading above $30 in the years leading up to the financial crisis.
Regions Financial’s revenues have weakened each year since 2007. The Federal Deposit Insurance Corporation has said that banking institutions have posted weaker revenue but higher profits recently due to stronger balance sheets and better capital positions. Banks it insures posted $28.8 billion in net income from April to June, a 38% increase.
The Paragon Report said in September that Regions’ is benefiting from “improving credit which allows them to release loan loss provisions to earnings” and its “loan-loss provisions were reduced to $398 million from $651 million a year earlier. Net charge-offs were 2.71 percent of average loans, compared with 3 percent a year ago.”
