The motley fool
M&T Bank published disappointing second quarter results in July. Its struggles have recently depressed the stock, which means it could be a good time for investors interested in buying.
Consumer loans are currently enjoying more momentum than commercial loans, and M&T is primarily a commercial lender. Its credit quality has also deteriorated in recent times – its unrecorded loans, those that went 90 days without payment, climbed 15% year over year in the second quarter.
But M&T Bank is developing non-interest-bearing deposits well, so it currently pays no interest on around 43% of total deposits. M&T’s upcoming acquisition of Connecticut-based People’s United bank is also promising. Its addition will significantly increase M&T and its tangible book value. Banks trade on the basis of the TBV, so an increasing TBV usually helps the stock. The deal is also expected to increase M&T earnings per share from 10% to 12% in 2023. It is also expected to open up new revenue opportunities; People’s United has many small business clients to which M&T can cross-sell products and services. Meanwhile, People’s United brings in a strong equipment finance business that it can expand to M&T customers.
While M&T Bank may face challenges in the near term, this is an opportunity to buy long-standing, high-performing bank stock at a historically low tangible price-to-book ratio – with a dividend paying off recently. about 3.2%.
Ask the fool
From BN to Madison, Indiana: What does it mean if a company goes public via direct listing?
The madman replies: Think of a traditional IPO – the initial public offering whereby most companies go public, issuing new shares to trade on the public market for the first time. The process typically involves companies hiring investment banks as underwriters to manage the process, including determining an appropriate valuation for the company and the share price. For this, underwriters often received up to 7% of the gross proceeds of the IPO.
With a direct listing, companies bypass underwriting intermediaries and sell existing stocks (such as those owned by employees) to the public, saving money.
From the CD in Walnut Creek, CA: What’s so bad about buying a stock at, say, $ 30 instead of $ 20, if you’re sure it will hit $ 60 in 10 years?
The madman replies: It’s all in the math. Imagine that Holy Karaoke Inc. is trading at $ 30, and you expect it to hit $ 60 in a decade. This would be a gain of 100% in 10 years, or an average annual gain of about 7.2%. But if you bought it at $ 20 and it hit $ 60 in 10 years, that would be a tripling – a gain of 200% (about 11.6% per year, annualized).
Considering that the overall stock market has gained around 10% per year over very long periods of time, you can see that a 7% annual gain is less attractive than an 11% gain. Still, there’s a case to be made that getting into a formidable stock at $ 30 instead of $ 20 is okay, especially if you hope to hold it for many years to come. In general, however, the price you pay for a stock matters.
School of fools
When considering investing in a business, especially a relatively small one, it is worth checking who owns its shares. Portions held by insiders and institutions offer insight.
With insiders, it’s usually good to see them owning a lot of stocks. This is because when the leaders and employees of a business own a part of the business, they have a strong incentive to help the business succeed. If the company is successful, its shares will likely appreciate, which will benefit insiders – and us, ordinary investors as well.
You may come across information about insiders buying or selling shares of a company. Insider buying is a pretty good sign; this means that those familiar with the company expect its stock price to rise. Insider selling, however, isn’t necessarily a bad sign. This is because many executives receive a large portion of their compensation in the form of stocks, so they will occasionally sell a bunch of stocks just to get their hands on a lot of money.
While high insider ownership is promising, the jury is out on high institutional ownership. Institutions such as mutual funds, pension funds, hedge funds, and endowments will often invest some or a large portion of their substantial assets in stocks. Some consider high institutional ownership to be a good thing, as big investors must have researched the company and liked what they saw. Others see less chance of the stock being undervalued if institutions already own a large chunk of it – and they worry about what will happen if institutions change their mind and bail out.
It is a reasonable strategy to find and invest in promising small businesses with little institutional ownership. If companies are successful and grow, they will attract the interest of institutional investors as they grow – and as institutions start buying millions of shares, it can give stocks a boost.
You can find out about the company’s shareholders on some online stock exchange sites and sometimes from the companies themselves. On Finance.Yahoo.com, for example, enter a company’s ticker symbol, then click “Holders.”
My dumbest investment
From DB, online: My dumbest investment was to sell my Microsoft stock for about $ 40 a piece in 2014. (I bought them in 2008 for about $ 30 each.) I learned that it’s better to keep a good company, unless the underlying fundamentals of the business have changed.
The madman replies: It’s an extremely common mistake to prematurely sell shares of a great company – and many people do it after making a reasonable gain, like you did.
Your $ 30 to $ 40 trip with the stock gave you a 33% gain, but as you know, if you had held on you would have done a lot better. After you sold your stock at around $ 40, the stock’s value continued to rise, but not in a linear fashion. The shares were recently trading at around $ 300 apiece. So if you had held on you would have a 900% win on your hands. In the 13 years since you bought them, these stocks have risen at an average annual rate of around 19%.
The story is the same for many large long-term players: many people have sold after a gain of 20% or 50% or even 100% or 300%, only to miss out on gains of 100% or 10,000% or even more.
The more you learn about your holdings, the stronger your beliefs about them will be, which can help you hold on as long as their future looks bright.
Who am I?
My roots go back to 1925, when my crop dusting predecessor, Huff Daland Dusters, was founded as the first commercial agricultural airline company. Its 18 planes made up the largest private fleet in the world. I bought Northwest Airlines in 2008 and almost half of Virgin Atlantic in 2013. In 2011, I was the first airline to offer baggage tracking through a mobile app. Today, based in Atlanta and with a market value recently close to $ 26 billion, I am an aviation giant, carrying up to 200 million people a year on up to 15,000 daily flights. Who am I?
Did you forget the question from last week? Find it here.
Trivia response from last week: Halliburton