July 12 (Bloomberg) -- David Ellison learned a simple lesson from legendary mutual-fund manager Peter Lynch as a young bank analyst at Fidelity Investments in the 1980s: If things at a company are getting better, you want to own its stock.
Ellison, who today runs two top-rated financial funds at Friedman Billings Ramsey & Co., said things are improving for banks, especially small ones that can benefit from improving credit conditions and consolidation in the industry.
“We’re in the process of going from ugly to OK in banking,” Ellison said in an interview at his Boston office. “If you ride the right horses, you will do all right.”
Investors such as Jeremy Grantham and Robert Rodriguez remain bearish on lenders as ongoing struggles with delinquent residential and commercial debt have bank failures on pace to exceed last year’s 140, the most since 1992. Ellison, who moved about 60 percent of his funds into cash in 2008, has added to top holdings including Washington Federal Inc. and Provident Financial Services Inc.
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About the author:
Mr. Huebscher is the founder and CEO of Advisor Perspectives, a web site and newsletter that provides investment strategy analysis for financial advisors and wealth managers. In 1982, he founded the investment software division of Thomson Financial, where he created the PORTIA product, a portfolio management system for institutional investors. In 1990, he founded Hub Data, a market data redistribution service, which he sold to Advent Software in 1998. He has also worked in the account aggregation field, as a consultant to both vendors and wealth managers. He is a graduate of the Harvard Business School (1982) and Connecticut College (1976).