• Subscribe
  • Log In
  • Home
  • Daily Diary
  • Asset Class
    • U.S. Equity
    • Fixed Income
    • Global Equity
    • Commodities
    • Currencies
  • Sector
    • Basic Materials
    • Consumer Discretionary
    • Consumer Staples
    • Energy
    • Financial Services
    • Healthcare
    • Industrials
    • Real Estate
    • Technology
    • Telecom Services
    • Transportation
    • Utilities
  • Latest
    • Articles
    • Video
    • Columnist Conversations
    • Best Ideas
    • Stock of the Day
  • Street Notes
  • Authors
    • Bruce Kamich
    • Doug Kass
    • Jim "Rev Shark" DePorre
    • Helene Meisler
    • Jonathan Heller
    • - See All -
  • Options
  • RMPIA
  • Switch Product
    • Action Alerts PLUS
    • Quant Ratings
    • Real Money
    • Real Money Pro
    • Retirement
    • Stocks Under $10
    • TheStreet
    • Top Stocks
    • TheStreet Smarts
  1. Home
  2. / Investing
  3. / Financial Services

Build Your Own Trade-of-the-Decade Portfolio

13Fs from these 3 bank stock activists provide the tools you need.
By TIM MELVIN Feb 17, 2016 | 03:00 PM EST
Stocks quotes in this article: HFBC, WAYN, LSBK, BPOP, EVBS

The 13F headlines will be flying fast and furious throughout the day today. By the time the deadline rolls around this afternoon, the stack of paper I cleared over the weekend will be replaced by a host of new material.

There has already been some interesting buying and selling among the value investors I follow, as the smart, patient money started to buy as prices weakened in the final three months of 2015. While there is no way to know for sure, I suspect most of the buying was done in December as the Russell 2000 began to break decisively lower. That would fit the pattern of most value investors. The really good news is that the continued market weakness in early 2016 means we can clone the picks of some of Wall Street's smartest at lower prices than they paid.

Today, I want to stick with the community bank stock activists and investors. While community banks have held up much better than their larger cousins, many are a little lower and you can create an "activist bank stock portfolio" at attractive prices. Over the years I have made a lot of money cloning the actions of small bank activists. It is a small, specialized niche that very few investors pay attention to.

Joseph Stilwell has always been one of my best sources for ideas. He has been an activist presence in the community bank space for a couple of decades and a phone call from Stilwell has ruined many a day for bankers all over the U.S.

Stilwell was not very active in the recent quarter, only adding to five stocks. He bulked up positions in HopFed Bancorp (HFBC), Wayne Savings (WAYN) and Lake Shore Bancorp (LSBK) by small amounts, but his larger buying in the last three months of 2015, took place further south. Stilwell added to his stakes in Puerto Rico banks, increasing his First Bank (FBP) position by 31%, and more than doubling his holdings in Popular (BPOP). If these banks survive the economic and debt problems that currently plague Puerto Rico the upside potential is enormous.

Lawrence Seidman is another bank activist I have followed over the years. The former SEC attorney opened his community bank-focused investment firm back in 1994 and has compiled a strong record of successful shareholder activism and profits. In the fourth quarter of 2015, Seidman added to 11 positions, three of which were new. His new bank stock buys were BCB Bancorp (BCBP), Bankwell Financial (BWFG) and MSB Financial (MSBF). His largest additions were to Sunshine Bancorp (SBCP), Malvern Bancorp (MLVF) and Blue Hills Bancorp (BHBK). Lastly, Seidman added to stakes in Equitable Financial (EQFN), Provident Bancorp (PVBC), Melrose Bancorp (MELR), ASB Bancorp (ASBB) and Waterstone Financial (WSBF).

PL Capital has also been a very successful activist in the sector. One observer called the fund the "bogeymen of banking" for its aggressive activist positions in small bank stocks. In the last three months of the year, PL added to eight positions, four of which were new to the fund. New community banks added to the fund are River Valley Bancorp (RIVR), LCNB Corp. (LCNB), Eastern Virginia Bancshares (EVBS) and First Northwest Bancorp (FNWB). PL Capital also added to existing positions in Mutualfirst Financial (MFSF), Old Point Financial (OPOF), Coastway Financial (CWAY) and SB Financial Group (SBFG).

Tracking and stealing ideas from PL Capital has paid for a lot of my bad habits over the years.

Community bank stocks really are the trade of the decade. The fact is, many smaller banks cannot afford to remain independent given the cost of regulatory compliance. Technology costs, especially cybersecurity protection, are another huge obstacle. On the other side of the coin, the only path to growth for the medium and larger institutions is to buy assets and earnings power.

There is an enormous amount of money to be made by patient disciplined investors. The 13F filings of the leading small bank activists are a great way to start building your trade of the decade portfolio.

Get an email alert each time I write an article for Real Money. Click the "+Follow" next to my byline to this article.

At the time of publication, Melvin was long hfbc, wayn, lsbk, msbf, evbs, cway, mfsf, fnwb, opof, melr, asbb, eqfn and wsbf.

Please note that due to factors including low market capitalization and/or insufficient public float, we consider many of these names small-cap stocks. You should be aware that such stocks are subject to more risk than stocks of larger companies, including greater volatility, lower liquidity and less publicly available information, and that postings such as this one can have an effect on their stock prices.

TAGS: Investing | U.S. Equity | Financial Services

More from Financial Services

Bearish Bets: 3 Stocks You Should Think About Shorting This Week

Bob Lang
Aug 14, 2022 10:30 AM EDT

These recently downgraded names are displaying both quantitative and technical deterioration.

What AIG's Charts Say About the Stock Ahead of Earnings

Bruce Kamich
Aug 8, 2022 2:03 PM EDT

The stock just tested the underside of the declining 50-day moving average.

Bearish Bets: 3 Stocks You Really Should Consider Shorting This Week

Bob Lang
Aug 7, 2022 10:30 AM EDT

These recently downgraded names are displaying both quantitative and technical deterioration.

I'm Banking on a Play in B. Riley Financial

Bret Jensen
Aug 7, 2022 7:30 AM EDT

Let me show you a covered-call setup in this investment management and financial services company.

Here's Why Apple Has Me Nervous About the Stock Market

Bruce Kamich
Aug 4, 2022 11:36 AM EDT

You may recall what I recently wrote about Costco.

Real Money's message boards are strictly for the open exchange of investment ideas among registered users. Any discussions or subjects off that topic or that do not promote this goal will be removed at the discretion of the site's moderators. Abusive, insensitive or threatening comments will not be tolerated and will be deleted. Thank you for your cooperation. If you have questions, please contact us here.

Email

CANCEL
SUBMIT

Email sent

Thank you, your email to has been sent successfully.

DONE

Oops!

We're sorry. There was a problem trying to send your email to .
Please contact customer support to let us know.

DONE

Please Join or Log In to Email Our Authors.

Email Real Money's Wall Street Pros for further analysis and insight

Already a Subscriber? Login

Columnist Conversation

  • 02:23 PM EDT STEPHEN GUILFOYLE

    We're Cleaning Out This Retailer From the Bullpen

    Check out the latest moves in TheStreet's Stocks U...
  • 10:24 AM EDT JAMES "REV SHARK" DEPORRE

    This Weekend on Real Money

    To Improve Your Trading and Investing, Spend More ...
  • 08:44 AM EDT PETER TCHIR

    CPI Beats Expectations, But Maybe Not the 'Whisper'?

    Slightly better-than-expected inflation across the...
  • See More

COLUMNIST TWEETS

  • A Twitter List by realmoney
About Privacy Terms of Use

© 1996-2022 TheStreet, Inc., 225 Liberty Street, 27th Floor, New York, NY 10281

Need Help? Contact Customer Service

Except as otherwise indicated, quotes are delayed. Quotes delayed at least 20 minutes for all exchanges. Market Data & Company fundamental data provided by FactSet. Earnings and ratings provided by Zacks. Mutual fund data provided by Valueline. ETF data provided by Lipper. Powered and implemented by FactSet Digital Solutions Group.

TheStreet Ratings updates stock ratings daily. However, if no rating change occurs, the data on this page does not update. The data does update after 90 days if no rating change occurs within that time period.

FactSet calculates the Market Cap for the basic symbol to include common shares only. Year-to-date mutual fund returns are calculated on a monthly basis by Value Line and posted mid-month.

Compare Brokers

Please Join or Log In to manage and receive alerts.

Follow Real Money's Wall Street Pros to receive real-time investing alerts

Already a Subscriber? Login