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Michael Price - A Penchant for Hard-Hit Banks

July 22, 2013 | About:
Sally Jones

Sally Jones

49 followers
Breaking up is hard to do, especially for global banks. Last summer when major bank stocks were below tangible book value, Michael Price of MFP Investors told Bloomberg, “That means the pieces are worth more than the whole.” At the end of May 2013, Moody's upgraded the U.S. banking system from “negative,” where it had sat for five years, to “stable.” However, smaller, distressed banks with ailing loan portfolios are merging for survival and creating opportunities for billionaire investors like Michael Price, whose trading shows a penchant for hard-hit banks.

In April, Price made a new buy of savings and cooperative banker First Security Group Inc. (FSGI) where insider trading was very active in the same month with anticipated growth from First Security’s recent recapitalization. The company is down 14% over 12 months. Price’s other top holding West Coast Bancorp was recently sold to Columbia Banking System Inc. (COLB), up 40% over 12 months.

On the Forbes 400 list, Guru Michael F. Price is 368th richest with a net worth of $1.3 billion, as of March 2013. Price is the founder and manager of MFP Investors LLC. GuruFocus research shows the current portfolio of MFP Investors with 94 stocks (nine of them new) and a total value at $763 million, up from at $705 million reported in April. His firm has a quarter-over-quarter turnover of 11%.

Here’s a review of his current top three holdings:

SOLD

No. 1: West Coast Bancorp (WCBO)

Weightings: 5.4%

Shares Owned: 1,707,000

As of April 1, 2013, West Coast Bancorp merged with Columbia State Bank. After the merger, the Pacific Northwest community bank has over $7 billion in assets, approximately 150 branch locations, and is considered to be well capitalized by regulatory standards. The Columbia Banking System Inc. (COLB) is the bank holding company for the newly merged Columbia State Bank.

Michael Price was the top shareholder of WCBO, holding 8.85% shares outstanding prior to its sale after the West Coast’s commercial loan portfolio fell during the banking crisis. Price was one of 20 other investors that contributed $155 million in new capital to meet regulatory orders. The new investors received 83% of the company shares, according to The Oregonian.

Up 40% over 12 months, Columbia Banking System Inc. has a market cap of $1.28 billion. COLB shares trade at a P/E of 19/90 and a P/S of 4.10. The current share price is $25.16. Price bought his WCBO shares at an average price of $19.17 as of quarter ending June 30, 2012.

Historical pricing:

1374514963901.png

Down 9% over 12 Months

No. 2: Intel Corp (INTC)

Weighting: 5.2%

Shares Owned: 1,810,000

Share Price: $22.89

In the top 20 shareholders on INTC, Michael Price holds 0.04% of shares outstanding. His trading history shows an average loss of 12% on 1,810,000 shares bought at an average price of $25.92, compared to the current share price of $22.89.



First incorporated in 1968, Intel Corp. (INTC) has a market cap of $114.79 billion; its shares were traded at around $22.89 with a P/E ratio of 12.30 and P/S ratio of 2.25. The dividend yield of Intel Corp. stocks is 3.90%. Intel had an annual average earnings growth of 8.5% over the past 10 years. GuruFocus rated Intel Corp. the business predictability rank of 3.5-star.

Historical pricing:

1374515313053.png

Up 66% over 12 Months

No. 3: Hess Corp (HES)

Weighting: 5.2%

Shares Owned: 550,000

Share Price: $73.50

A new buy for the number nine top Guru stakeholder of HES, Price owns 0.16% of shares outstanding in the energy company. His trading history shows a gain of 12.1% on 550,000 shares bought in the first quarter of 2013 at an average price of $64.98 compared to the current share price of $73.50.

The energy company Hess Corp. was incorporated in 1920. Hess Corp. has a market cap of $24.63 billion; its shares were traded at around $73.50 with a P/E ratio of 9.20 and P/S ratio of 0.80. The dividend yield of Hess Corp. stocks is 0.50%. Hess Corp. had an annual average earnings growth of 7.4% over the past 10 years.

Historical pricing:

1374515957616.png

Here is the complete portfolio of Michael Price.



1. Michael Price's Undervalued Stocks

2. Michael Price's Top Growth Companies

3. Michael Price's High Yield stocks

4. Stocks that Michael Price keeps buying



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About the author:

Sally Jones
Sally Jones writes about Real Time Picks. She says, "I truly enjoy watching the Gurus in realtime and telling their story."

Rating: 3.0/5 (6 votes)

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