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BW: Peter Lynch’s Lesson Leads Ellison Back Into Banking Stocks

July 12, 2010

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.

Read the complete article at Businessweek.com

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