Dip Buyers Scorched by Cratering Bank Stocks Head for the Exits - Bloomberg

hank

“The fear-driven selloff that’s cut the stock-market values of some banks in half may look like a perfect chance to buy the dips. If only they’d stop falling.  As shares of lenders (BKX) tumbled for a fourth straight week, investors are showing signs of throwing in the towel. They yanked $2.1 billion out of financial stocks in the week through May 10, the most since May 2022, according to Bank of America Corp. (BAC) strategists citing EPFR Global data. Exchange-traded funds focused on the sector saw the biggest exodus of cash since September, according to Refinitiv Lipper. And the $29 billion Financial Select Sector SPDR Fund has seen more than $2 billion pulled out over just the past two weeks.”

Yahoo Finance (Reprinted from Bloomberg)

Crash

Well! I've learned some lessons through the years. I cannot sell my smallish, mid-sized bank stock at THIS point. (Stick out foot, then pull trigger.) ...I did unload a true beast: PRISX. TRP Financials, though. I redeployed the money, not taking it out. When I get some spare cash again at the head of the month of June, I'll be buying more of BHB. They've even managed to RAISE the dividend a tiny bit. P/E stands at 7.23. And P/B is 0.84. Price-to-cash-flow = 5.96. Trailing div is 5.81%. (That last one is surely connected to the fall in the share price.) The geniuses at Morningstar say I'm holding a stock that sits at 33% less than its true value. Market cap = 343.7588 Mil. Call me stubborn. But this one I can see is a "keeper." This crisis will pass, like the others. And I sense that it's a GOOD thing that this stock is not in the news.

dtconroe

Catching falling knives can be very painful! It is hard to predict how long that pain will last.

yogibearbull

Regional bank KRE is in mid-30s again (as in early-May). I think that is good price for it - but after an initial position in early-May, I am not adding to it here. The downside is 2020/pandemic-low in mid-20s. The upside is if there is a comprehensive reform on the FDIC insurance coverage.

This is like catching a falling knife. So, don't just jump on it.

Right now, the FDIC has a few proposals on deposit-reforms, and the Treasury (so, the White House) and the Fed are reviewing those. The FDIC is also proposing temporary fees on banks to recover its costs of covering ALL deposits (that it didn't have to do) in the rescues of 3 failed regional banks (SVB, Signature, First Republic). Of course, this cannot continue on ad-hoc banks as more regional banks fail - PACW seems to be in trouble now.

https://stockcharts.com/h-sc/ui?s=KRE&p=D&yr=1&mn=0&dy=0&id=p27896665771

hank

Let’s turn the calendar back one month …

From CNN April 14, 2023

”Main Street’s retail investors have barreled into embattled bank stocks. It looks like nothing tempts people to bet on an industry more than bargain prices, even if they’re caused by the fear of imminent collapse.”

PRESSmUP

It’s impacting the preferred funds as well, which tend to have significant percentages of regional bank exposure. This environment does represent a significant opportunity though. USB is really tempting.

MikeW

Buffet just filed a disclosure that he sold USB and Bank of New York. He did initiate a position in COF.

hank

dtconroe said:

Catching falling knives can be very painful! It is hard to predict how long that pain will last.

Yes. Know what you’re buying based on the best information available. Go in slowly. Hopefully build up a position gradually at better and better prices. In fairness, these banks had to be pretty hard to evaluate. Deposits literally flew out the doors overnight. Enough people with cellphones can create havoc nowadays. (Just my humble take on knifes and daggers.)