Don’t Bank on the Banks!

Tags

3-6-3, Allied Irish Banks, Bank of Ireland, EIIB, iShares Turkey ETF, Loan-to-Deposit Ratio, TBTF, valuestockinquisition, Wilbur Ross, WisdomTree ETF

John from valuestockinquisition.com left a great comment here, and I thought I’d set down some thoughts here with a blog post rather than a comment:

I’m not too worried about EIIB (EIIB:LN) in this context, at this point I pretty much consider it to be a failed bank experiment. Now, they just need to monetize their bank licence and move on. More generally, John has some great points and examples, and I’m sure he could provide more. It’s like fingers in the dyke – for every bank ratio you focus on, there’s another you’re forgetting and that’s about ready to spring a leak. And he highlights that no ratio’s proven to be a reliable predictor of success or failure. God, all in all, just look at any specific TBTF bank and it really just looks like one great bastard of a Rube Goldberg contraption…

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Psst! Feeling Good? Wanna Do A Share Buyback?!

Tags

intrinsic value, Margin of Safety, NAV, Price/Sales, share buyback, Total Produce, Treasury Shares, valuestockinquisition

Btw Happy 11.11 11-11-11! I’m amused to see the media highlighting all the weddings today, more romantic than induced labor I guess…! Yes, lots of babies being born today – and if you’re born in Korea today your SS number begins with 111111… It’s also Nigel Tufnel Day – c’mon turn up your stereo/ipod to 11!!

valuestockinquisition highlighted his distaste for share buybacks here and here. Ideally, I’m a supporter of share buybacks, but in reality I have very mixed feelings about them… The quality of stock/share buyback analysis in most companies is atrocious – throw away your corporate finance textbooks! I don’t think I’ve ever met anybody in a corporate environment who could come up with (or discuss coherently) a fundamental Intrinsic Value for their company stock. This is a tremendous handicap for any strategic decision making, and of course for share buybacks. In most companies, the analysis goes something like this: Do we have spare Cash/Debt for a buyback? Are we feeling good about the company, the share price, ourselves? What’s the EPS impact? This is the final trigger for any share buyback, let’s take a look at the math:

Total Produce (TOT:ID) – A Fruity Delight?

Tags

Balmoral International Land, DCC, Fyffes, Greencore, Margin of Safety, Net Interest/EBITA, pdosullivan, Total Produce, value investing, valuestockinquisition

Total Produce (TOT:ID)

Mkt Price:  EUR 0.39

Mkt Cap:  EUR 128.7 mio

Net Interest/EBITA%:  9.0%

P/E Ratio:  5.6

P/S Ratio:  0.05

Dividend Yield:  4.6%      

Fair Value:  EUR 0.882

Upside Potential:  126%

Total Produce is Europe’s premier fresh produce provider. Growing, sourcing, importing, packaging, distributing and marketing over 200 lines of fresh fruits, vegetables and flowers, the Total Produce group distributes some 250 million cartons of fresh produce annually to the retail, wholesale, foodservice and processing sectors across 19 countries in Europe.