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August Ben Graham Net-Net Newsletter: A liquidating bank selling for 56% of book value

August 04, 2012
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GuruFocus

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The Ben Graham: Net-Net Newsletter’s August’s pick is a bank with a checkered past that was heavily involved in subprime lending. The bank was required to wind down all subprime products and is in the process of liquidating. The bank has sold their loan portfolio and deposits to a Pennsylvania bank, which is pending approval. The bank is selling for 56% of adjusted book value. Upon sale completion book value will be mostly liquid cash.

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This month’s pick:

The Ben Graham: Net-Net Newsletter’s August pick is a bank is the process of liquidating, the current price is far below a reasonably adjusted book value.

This month’s pick:

· Has submitted a liquidation plan to the FDIC to be executed by Dec 31st 2012.

· Entered into a transaction to sell loans and deposits to Bryn Mawr Trust. All other liabilities can be settled by cash on hand.

· An adjusted book value of $3.48 with a last trade of $1.95

Download your copy of the Ben Graham: Net-Net Newsletter today

“It always seemed, and still seems, ridiculously simple to say that if one can acquire a diversified group of stocks at a price less than the applicable net current assets alone...the results should be quite satisfactory. They were so, in our experience, for more than 30 years.”- Ben Graham

What’s a Net-Net?

A net current asset value bargain—or net-net—is a stock selling for less than the value of its current assets—cash, receivables, and inventory—minus all liabilities. Basically, it’s a stock selling for less than its liquidation value.

What’s the Ben Graham: Net-Net Newsletter?

GuruFocus’s Ben Graham: Net-Net Newsletter is written by Nate Tobik. It picks one new net-net every month. The newsletter goes out to subscribers on the first Friday of the month. The newsletter looks for stocks that have both a tangible margin of safety and reasonable upside potential.

So, get your copy of the Ben Graham: Net-Net Newsletter today.


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