Before we move away from 13d filings I have to cover the report from one of my new favorite value-oriented firms. I have a few grudges with the principles of EJF Capital, related to their previous careers at Freidman Billings Ramsey, now FBR and Company (FBRC).
They hired all the best bank analysts -- and with one exception best bank stock traders. (The best is still my old friend John Boo, who stayed with the firm I worked for at the time). They took control of small bank stock trading in the Mid-Atlantic region as well as parts of the Southeast.
Nonetheless, these guys have moved on to run their own firm and they are brilliant stock pickers across the financial services and REIT space.
The firm was pretty active in the last quarter of 2015. Along with what seems like the rest of the world they were buyers of ALLY Financial (ALLY) formerly known as GMAC. The auto financial services company and bank is certainly cheap enough with the stock trading at just 70% of book value right now. I probably should be buying it but as a former GM (GM) I still have a serious mental block when it comes to any company related to General Motors.
EJF Capital still has a big stake in the eventual housing recovery as well. They have a big position is shares of American Homes For Rent (AMH), Silver Bay Realty (SBY) , Starwood Waypoint Residential Trust (SWAY) and Colony Financial (CLNY), all of which own a lot of individual rental homes. They were trading around the positions this month as they were buying Starwood and Colony while trimming American Homes and Silver Bay.
All of them were buying when prices were a lot lower and I think over time we will see a sustained housing recovery. It is just not going to happen as soon as some had hoped. Patient investors might want to consider these if we get a dip in the market that brings prices lower by 10% or so.
The firm also likes the real estate finance business. They were buyer of Starwood Property trust during the quarter. Starwood acquires, finances, and manages commercial mortgage loans, other commercial real estate debt investments, commercial mortgage-backed securities, and other commercial real estate-related debt investments in the United States and Europe. The stock is a little rich on book value for me at 1.4 times but income buyers might like the 7.9% yield.
They were also buying shares so one of my favorite real estate finance companies sin the quarter. Arbor Realty (ABR) invests in multi-family and commercial real estate-related bridge loans, junior participating interests in first mortgages, mezzanine loans, preferred and direct equity, discounted mortgage notes, and other real estate-related assets; and in mortgage-related securities and real estate properties. I started buying it back in 2009 and have been delighted with results. Arbor has grown book value from $3.34 to the current level of $8.84 during the time I have owned and the stock price has more than doubled. At today's price the stock is still cheap at 82% of book value and yield a little over 7%.
The principles of EJF Capital have understood and participated in the enormous potential of community bank stocks. I have always done well with the little banks and I suspect these guys have as well. As the banking system has slowly put the credit crisis in the rear view mirror while the regulatory and economic environment have created an atmosphere that encourages, if not forces, smaller banks to seek a merge partner the opportunity is greater than ever. EJF Capital seems to share my enthusiastic current outlook as they were buyers of a bunch of little banks in the final three months of the year.
They bought new positions in Talmer Bancorp (TLMR), First Connecticut Bancorp (FBNK), Westfield Financial (WFD), Entegra Financial (ENFC), Royal Bancshares of Pennsylvania (RBPAA) and Anchor BanCorp Wisconsin (ABCW). EJF Capital added to positions in TFS Financial (TFSL), Independent Bank Corporation (IBCP), ConnectOne Bancorp (COB), Banner Corporation (BNNR), Peapack Gladstone (PGC), Clifton Bancshares (CSBK), Southern First Bancshares (SFST), Waterstone Financial (WSFB) and Timberline Bancorp (TSBK) in the quarter. These guys know small banks and they are buying. You should be, too.
EJF Capital was founded and is managed by some very smart folks. They should be on your list of 13s to track every quarter.