An Undiscovered Gem from Barron's?

Visiting Yahoo! Finance, I saw an article headline from Barron's that intrigued me, "The Best Bank You've Never Heard Of". I was hoping the article might be about some great micro cap bank I'd never heard of, but guessed it would be about a mid cap bank I already knew about, e.g., maybe Hudson City. I guessed wrong though: the bank was the mega cap multinational Santander. Is this is the sort of 'undiscovered gem' readers can expect from Barron's?

This article is my most recent reminder of why I don't read Barron's regularly. The second most recent reminder was this article back in May, which was listed under the "headlines" tab at the time for a stock I own, U.S. Energy Corp (USEG). At the time, this article wasn't available online, so I went to Barnes & Noble and looked for it in the dead tree edition of Barron's. Here was the one sentence that mentioned USEG,

Companies like Cameco (ticker: CCJ), BHP Billiton (BHP), Rio Tinto (RTP) and U.S. Energy (USEG) mine and/or trade uranium, although its value contribution to their shares is overshadowed by the many more popular metals these firms also trade.

Reading that, I thought: Is it too much to expect a Barron's writer to know at least as much about this company as me? U.S. Energy Corp. neither mines nor trades uranium, and, in fact, sold most of its uranium assets to Uranium One two years ago, as I have noted on this blog.

Barron's benefits from the inertia of its brand and of its readership. When I got out of college, I worked for a few months at a tiny, over-the-counter investment bank/brokerage in Manhattan where I was supposed to read Barron's every weekend. So I did. I'd read Alan Ableson's column, which was a little like Louis Rukeyser in print, and then I'd slog through the rest of it. I soon figured out that we weren't actually expected to learn anything useful from Barron's; we were supposed to read it because the affluent investors we were calling on read it, and they might mention something from the most recent issue and expect us to be familiar with it.

When journalists lament the decline of the print business, they ought to consider that the Google- and Craig's List-powered disruption of the advertising model isn't the only reason for print's decline; so is the decline of journalism itself. A lot of what passes for journalism today simply isn't worth paying for in any medium.

More on the Strongest and Weakest Banks in America

In a post last August, "The Strongest and Weakest Banks in America" (which, according to Feedjit, still attracts a number of readers), we mentioned the "X-List Report" which ranked the financial strength of banks and thrifts from "A" to "E". Another ranking system of American banks and credit unions, drawn in part from data in bank reports to government regulators, is offered by Bauer Financial. Bauer Financial charges for its detailed reports on each institution, but it lists their star rankings at no charge. Those star rankings range from 5 stars ("superior") to no stars (presumably worse than "troubled", which is Bauer's description for 1 star banks). You can look up a particular bank, or see a ranked list of all banks and credit unions by state here.

No Shares Available to Short?

That was one of two error messages I got from Scottrade today when I tried to short Federal Trust Corp. (Amex: FDT), one of the stocks I mentioned in this recent post, "The Strongest and Weakest Banks in America". FDT had risen from about 65 cents per share when I posted that to 85 cents per share, and after following its candlestick charting on Americanbulls.com, I intended to short it at 80 cents today. Plan foiled.

Banks Update, Part II

One of the banks we mentioned in a recent post ("The Strongest and Weakest Banks in America"), Alpharetta, Georgia-based Integrity Bank (Pink Sheets: ITYC.PK), failed yesterday. From the Atlanta Constitution-Journal's website ("Alpharetta-based Integrity bank fails"),

Birmingham-based Regions Financial will acquire Integrity’s $974 million in deposits, the FDIC said. Integrity customers will have access to their accounts and no interruption of service is expected, the FDIC said. Integrity’s five branch offices will reopen Tuesday as Regions offices and customers can continue to use those locations, the FDIC said.

However, the matter may not be over. The FBI, which investigates possible financial crimes, is looking into the situation, said agency spokesman Stephen Emmett. The “FBI is working with the FDIC” on the case, but it “is not prepared to discuss Integrity Bank at this time,” he said.

The Alpharetta-based bank, which opened its doors in 2000 with a Christian-centered philosophy, is the 10th U.S. bank to fail this year and the second Georgia institution to fail in the past 12 months.

Banks Update

Above is a photo of the new branch I mentioned that Pascack Community Bank (OTCBB: PCCB.OB) is building in Hackensack, NJ (I snapped this photo out of the sun roof in my car as I was driving by, hence the poor quality). When I mentioned this initially in another earlier post ("America's Smartest Banker"), I assumed that building a new branch was a positive sign for a bank. Perhaps I shouldn't have assumed that. In doing some research on one of the banks that I mentioned as a potential short idea in a recent post ("The Strongest and Weakest Banks in America"), I found out that one of those "weakest" banks, Beach Community Bank in Florida (OTCBB: BCBF.OB) is building a new branch as well. From Beach Community's website:

We are presently under construction with a new branch coming soon to Crestview.

The Strongest and Weakest Banks in America

Hat tip to Barry Ritholtz for this The "X"-List Report" (PDF) on the strongest and weakest banks in America. The list draws on data from the FDIC's Call Reports and the Office of Thrift Supervision's Thrift Financial Reports to rank banks and thrifts from strongest ("A") to weakest ("E"). Some of the "weak" ("D") and "very weak" ("E") banks are publicly traded, and could be candidates for selling short. Another idea might be a paired trade going short one of the weakest banks and going long one of the strongest. I haven't looked into these in detail yet, but here are the symbols of some of the "weak" and "very weak" publicly traded banks on this list, including one that's already in bankruptcy:

FCEN.OB

BCBF.OB

FMNTQ.PK

DSL

FDT

FLCM.OB

ITYC.PK

Seven Questions for William Poole

The former St. Louis Fed president speaks with Foreign Policy about the GSEs, the credit crisis, and the economy, "Seven Questions: How Bad Will it Get?". Intro:

When William Poole warned in 2003 that Fannie Mae and Freddie Mac lacked the capital to weather a financial storm, his advice went unheeded. Five years later, the outspoken former president of the Federal Reserve Bank of St. Louis is far too polite to say “I told you so,” but he does have a message for the Fed: Wait too long to tackle inflation, and you’ll face an even worse recession in the years to come.

It's worth reading this brief interview in its entirety.