Chris Mayer kicks off Day Two of the Value Investing
As editor and founder of
Crisis, Mayer is the lone newsletter publisher scheduled to speak
at the two-day conference. Since he founded
Capital & Crisis
in 2004, the newsletter's recommendations have average a solid
16.7% annual return.
In this morning's speech, Mayer talked about the advantages of
"owner-operated" companies -
Howard Hughes (
with Bill Ackman and
with Sam Zell are a couple examples. However, Mayer's stock
recommendation today is from a sector he particularly likes right
now - banks.
His reasons for liking banks are fairly simple:
- Bank stocks have low valuations based on price to tangible
- Because of consolidation, there are a lot less banks these
- Takeover prices are on the rise, averaging 140% of book
value this year
One example of a bank stock Mayer likes is
Charter Financial (
, a Georgia-based bank that he dubbed a "dividend machine." The
company has paid $16.80 per share in dividends since going public
in 2001. It currently pays a quarterly dividend of 5 cents per
share, and earlier this month paid a 25-cent special
Mayer believes Charter Financial's downside is low, but he's
unsure what the upside is. Because of that, he only likes the
Charter Financial as an EXAMPLE of the type of bank he looks for.
Really, Mayer says, investors should buy a basket of stocks -
banks or otherwise - that have similar profiles to Charter
One such stock is
Pulse Seismic (TSX: PSD).
Pulse Seismic is a Canadian-based company that provides data
and maps to natural gas explorers. It has free cash flow of 47
cents per share, very little debt, and is trading for less than
10 times free cash flow. It currently trades on Toronto Stock
Exchange for just over $4 per share.
And like Charter Financial and some of Mayer's previous
examples, Pulse Seismic is an "owner-operated" company.