When visiting Shrewd'm with a laptop, it can be pleasant to hold Command (or Ctrl with Windows) and '+' a few times. The site scales to allow any font size, and the larger font can be pleasant to read even for Shrewds with perfect sight! For luxury Shrewdness, you can combine that with setting the browser to full screen. You'll then find yourself Shrewding a lot.
- Manlobbi
Stocks A to Z / Stocks B / Berkshire Hathaway (BRK.A)
No. of Recommendations: 0
No. of Recommendations: 4
Snip from that blog post:
After opening a position in COF last quarter, Berkshire tacked on another 2.5 million shares in Q2.
Back in July, I linked to Berkshire director Chris Davis's recent interview with Barron's ' in which he laid out his bull case for the bank holding company. Here is what Davis had to say'
"Capital One has been a fintech company since the start. It uses data science to market financial services. It is still run by its founder, Richard Fairbank. The bank pays a high rate on its deposit base. It is a big issuer of credit cards ' primarily to working people, not big spenders. The best analogy is Progressive, a data-science company disguised as an insurer. Progressive realized early on that there is no bad risk; there is only bad pricing.
"Capital One has matched its loans to its deposits. At around $100 a share, it is trading right around tangible book value, for a business that has had a low- to mid-teens return on equity for 35 years."
Does anyone have any thoughts on Capital One Financial (COF)?
Current price about $107.
As with most financials the temptation is to put it into the "too hard" pile, but Berkshire is a better source for stock ideas than the average CNN show
Jim
No. of Recommendations: 8
Have been a customer of COF, using their cash rewards credit cards and online savings till a couple of years ago. I agree they are very well run. Have had them on my watchlist but never pulled the trigger, since I already owned a big position in Amex.
The well run credit card companies like Amex, COF and Discover have been much better investments than the big banks Buffett favors. Give me a COF any day over BAC or WFC, both as a customer and as an investor.
A mid size bank looking extremely attractive is EWBC which caters primarily to the well-heeled Chinese and other Asian diaspora in California and has a banking franchise in China. Is one of the most cost efficient banks, with ROA = 1.85% and ROE of 20+%. Was clobbered along with most mid size banks in California following SVB bankruptcy. It is down about 30% in the last year and is currently trading at a forward PE of 6.7. Too small for Buffett, but not for the rest of us.
No. of Recommendations: 2
Does anyone have any thoughts on Capital One Financial (COF)?I made this post on COF on the falling knives board back in Feb of this year:
https://www.shrewdm.com/MB?pid=574469564Not much data in the post, just a customer's view who thought it seemed attractively priced at the time, but sharing for what it's worth.
It was amazingly poor timing to suggest a bank stock, considering the banking turmoil started only about a week later as I recall.
The stock is currently about 2.5% below the price at the time of posting.
No. of Recommendations: 0
No. of Recommendations: 2
Not much data in the post, just a customer's view who thought it seemed attractively priced at the time, but sharing for what it's worth...
That post mentions that it was trading at around 6 times earnings.
Their earnings vary a bit, so an occasional odd number isn't by itself a surprise:
2019-2022 earnings per share were $11.02, $5.19, $26.84, $17.91...definitely something for which a fancier metric is needed!
What surprised me more is that Value Line thinks that they'll [still] be trading at an average annual P/E of 6.5 in 3-5 years, despite earnings almost doubling from the current dip.
Since it's a longer term forecast, it is presumably based on the notion that earnings will be neither unusually high nor unusually low in that future stretch...so 6.5 is a very downbeat assumption for cyclically adjusted earnings.
Go figure.
I have no idea if the various forecasts hold water, and I certainly have no record of making money in the credit card business.
But the forecast seems to be for a business that will in fact do well but whose stock won't really rise in price.
That's just fine for a very long hold for someone like Berkshire. But annoying for mere mortals!
There is a 2.17% dividend to tide you over, I suppose.
Jim
