Gayner, a value investor with a market-beating long-term track record, keeps his core formula for stock selection simple.
“In our equity portfolio, we continued to follow our historical and unchanging four-point discipline of seeking profitable businesses with good returns on capital, led by honest and talented managers, with reinvestment opportunities and capital discipline, at fair prices,” he said in his 2011 letter.
He remains 10 percent owner of Union First Market Bankshares, a company whose stock price appreciated almost 21% over the past year and whose current stock price of $15.52 represents an 18.5% gain on his average purchase price in the first quarter of 2010 when he first invested in the company.
Gayner mentioned in a January interview with GuruFocus that the investment is a “legacy of a private investment that we did here with a family here in Richmond, a privately owned bank which merged into a public bank” and called it a “good, solid operation.”
His other bank investments are few and include Bank of New York Mellon (NYSE:BK) and State Street Bank (NYSE:STT), which he defined as “service businesses as much as they are banks.”
Union First Market Bankshares is the holding company for Virginia’s largest community bank, Union First Market Bank, and several other non-bank financial affiliates.
Union First Market Bankshares’ net income for its third quarter ended Sept. 30 grew 14.5% sequentially and 6% year over year to $9.6 billion. Earnings per share grew 15.6% sequentially and 12.1% year over year to $0.37. The growth came as the bank saw increased mortgage loan sales resulting from higher loan production volume and increased net interest income.
Third quarter ROE also increased to $8.7% and ROA increased to 0.96% from 8.02% and 0.93% respectively, for the prior-year quarter. Non-performing assets as a percentage of total outstanding loans fell to 2.29% from 2.6% the previous quarter and 3.07% the prior-year quarter.
Union First Market Bankshares’ valuation has grown as well: The stock’s price at $15.34 is close to its two-year high, P/B ratio at 0.92 is close to its two-year high and P/S ratio at 1.7 is close to its three-year high.
UBSH data byGuruFocus.com
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