Bloomberg the Company & Products

Bloomberg Anywhere Login

Bloomberg

Connecting decision makers to a dynamic network of information, people and ideas, Bloomberg quickly and accurately delivers business and financial information, news and insight around the world.

Company

Financial Products

Enterprise Products

Media

Customer Support

  • Americas

    +1 212 318 2000

  • Europe, Middle East, & Africa

    +44 20 7330 7500

  • Asia Pacific

    +65 6212 1000

Communications

Industry Products

Media Services

Follow Us

Businessweek Archives

Banks To Bet On


BusinessWeek Investor -- Inside Wall Street

Banks to Bet On

Interest-rate worries have been depressing the valuations of one of Wall Street's most venerable sectors--banking stocks. And at a time when value investing seems to be making a comeback, more and more smart investors are casting their eyes in that direction. Dale Jacobs, who runs the Financial Investors hedge fund group--which specializes in the stocks of banks and savings and loans--believes this is a particularly good time to buy banks. One that he has been buying is the little-known and underappreciated Imperial Bancorp (IMP).

Based in Inglewood, Calif., Imperial is a major regional banker--larger than the various small community banks that dot the state but far smaller than, say, Wells Fargo. "I happen to be a believer that they're well-positioned for this market," says Jacobs. The Big Board-traded company has hardly been a Wall Street favorite, he notes: Its shares have dropped 30% in the past year. Earnings have been depressed by some of the company's subsidiaries. But the company has shed its laggard businesses, such as a sub-prime auto-lending operation, and Jacobs believes the company is undervalued. The company is trading at just 13 times estimated 1999 earnings, and he sees its shares, now at 19, trading in the "high 20s" in a year or so.

Another bank that Jacobs has been buying is Sovereign Bancorp (SVRN) in Wyomissing, Pa. Its shares took a wild ride in April when Sovereign announced plans to create a separate Internet bank. Jacobs is betting on Sovereign for more prosaic reasons: its profitability, sound management, and "good solid franchise." He sees its shares, now at about 13, climbing to 19 or better in the next twelve months.BY GARY WEISSReturn to top

Return to top


LIMITED-TIME OFFER SUBSCRIBE NOW
 
blog comments powered by Disqus