Watch for Opportunity
Posted at 9:40 a.m. EST, Jan. 14, 2009
The opportunities keep knocking, they just knock in strange places. The other day Associated Banc-Corp (ASBC) (a second loser out of Green Bay) priced an offering in the hole, and you made a quick buck if you blinked simply by getting in on a deal meant to appease the regulators.
In Getting Back to Even, I stress that this strategy of buying merchandise in the hole, even if you don't like the merchandise, is a dynamite idea, just dynamite.It is counterintuitive to buy anything you don't care for. ASBC and FMBI, like Zions (ZION - Get Report), are banks that I am not crazy about. But when they raise equity, they go from being a bad story to being a good story. Check the REITs -- names like Federal Realty (FRT - Get Report), Brandywine (BDN - Get Report), Boston Properties (BXP - Get Report), and many of the hotel REITs -- if you don't believe me. Or the huge gains in U.S. Steel (X - Get Report) after its deal. Other than Federal Realty, I didn't care for any of these deals before the refinancing. After, though, they are terrific. The Wells (WFC - Get Report)/ Bank of America (BAC - Get Report) bank deals and all of the other secondaries all worked too, including ones like Capital One (COF - Get Report) that seemed like they shouldn't, given Obama's attack on credit cards. In fact, only Synovus (SNV - Get Report) was a disaster. So keep an eye on these. They keep happening. Stocks that that are bad before they sell stock and good after. A great pattern. Would I hold ASBC or FMBU after these deals? I like to own the well-managed ones, not the "bad" ones, so I am indifferent after the deals are done. Money is money. I like the quick profits. At the time of publication, Cramer was long Apple and Bank of America.