Still Banking on MidSouth Bancorp
Originally published at 7:37 A.M.. EDT on July 30, 2015
MSL reported $0.42 of second-quarter EPS excluding non-recurring items (a death benefit and some securities gains). The firm also announced core EPS of about $0.35, ahead of consensus.
Most of the beat stemmed from a lower loan-loss provision (down from last year's large increase), which offset higher operating expenses and slightly weaker-than-expected top-line growth.
Smart gains were seen in the bank's return on assets (0.82%) and return on equity (13.2%).
Overall, end-of-quarter loans contracted by about 1%, reflecting the weakness in the energy sector (energy loans were -18% sequentially). Less than $1 million of those loans are in nonaccrual, and reserves are almost 2% of total energy exposure. (Non-energy loans are at a 1.1% rate of total loans.)
Non-performing loans rose by $33 million -- but that's driven by one large energy loan that has been restructured, plus several non-energy loans from a 2012 bank acquistion.
MidSouth shares trade at under 130% of tangible book value and are accorded a small core deposit premium of about 3%.
MSL remains on my Best Ideas List, and I'm holding on to my 12-month price target of $17.50 to $18.50.
Position: Long MSL
Small Miss for Lincoln National
Originally published at 11:16 A.M. EDT on July 30, 2015
The shares are down by 3%.
Sticking with the short that I have been adding to.
Position: Short LNC
Covering Some SPY, QQQ Shorts
Originally published at 9:17 A.M. EDT on July 27, 2015
As I suggested in my opening missive, I don't expect a precipitous or large drop in the averages this summer -- but rather, a sawtooth move lower.
As a result -- and in light of last week's market drop and further declines today in the futures -- I'm moving from a relatively high net short exposure to a more-modest short exposure. I covering some shorts of the S&P 500 ETF(SPY) - Get Report at $207.25 this morning in premarket trading, and of the Nasdaq 100 ETF(QQQ) - Get Report at $110.65.
Overall, I'm moving from a medium-sized short hedge to a small short hedge -- but I plan to re-short on any rallies.
Position: Short SPY (small), QQQ (small)
One More Time ... With Feeling
Originally published at 10:55 A.M. EDT on July 27, 2015
Again, for emphasis, given the large price gains (top market sector in last three months) and a flattening of the yield curve, be patient about adding to bank stocks.
I have previously written about my buy entry points for the group on a market drop.
My new buy levels are:
Position: Long BAC, C, JPM
At the time of publication, Kass and/or his funds were long MSL, BAC, C, JPM and short LNC, SPY and QQQ, although holdings can change at any time.
Doug Kass is the president of Seabreeze Partners Management Inc. Under no circumstances does this information represent a recommendation to buy, sell or hold any security.