This week is one of my favorite weeks of the summer. I am a big fan of Central Florida summers, with all the amusement parks, beaches and springs that we visit on weekends, but this week has nothing to do with beaches, the mouse or the boy wizard. There are no manatees, dolphins or even alligators involved, but it is potentially the most profitable week of the summer.
At the end of this week, 13f filings are due and in them we will get a peek at what the leading value and activist managers were doing with their clients' money in the second quarter. As is the case every quarter, I will read the filings of the big investors like Carl Icahn, Warren Buffett, David Einhorn and other superstars, but unless they do something really interesting and unusual there is no need for me to comment on them. The internet will be awash in coverage of those folks. I prefer to talk about some of the smaller successful investors that are out of the limelight and less well known.
One of the most anticipated filings for me every quarter is the bank stock specialists and sometimes activists at PL Capital. I have had the pleasure of speaking with these folks several times over the years; they are very smart and very aggressive. If they spot underperformance or mismanagement in a bank, they are not shy about making suggestions or, if necessary, waging a proxy fight. If you are active in the small banks -- and unless you are allergic to profits, you should be -- theirs is a must-read filing.
The mood must be pretty upbeat around the PL Capitals offices right now. They have seen takeover bids for Ameriana Bancorp (ASBI) and Metro Bancorp (METR) in recent weeks at big premiums to their cost, and MSB Financial (MSBF) did a second step conversion that has helped push the shares up almost 40% so far this year.
The firm was pretty quiet in the second quarter. They added to just four positions. I was happy to see they added to Old Point Financial (OPOF) -- a stock I just wrote about and bought recently. The Hamptons, Virginia-based bank is trading at just 87% of book value and has a solid financial condition. I find it interesting that they bought another bank in the same neighborhood, as they opened a new stake in Monarch Financial (MNRK) -- another little bank based in Chesapeake, Virginia. There has been a good deal of M&A activity in Virginia this year and it may be expand in that region of the state.
PL Capital went big as well this quarter, as they made a substantial addition to their positon in Bank of America (BAC). I have an aversion for Bank of America as well as Citigroup (C), as their role in the credit crisis still irks me somewhat, but the guys at PL Capital are a lot smarter than me and they seem to like the bank a lot. Finally, like all the rest of us in the bank stock world, they bought shares of recent thrift conversion Kearny Financial (KRNY). The Fairfield, New Jersey-based bank finished its second step conversion and now trades at just 87% of book value.
PL Capital did a little selling in the quarter as well. They disposed of the shares of Cape Bancorp (CBNJ) that they appear to have received in the Colonial Bancorp takeover. I am a big fan of Cape Bancorp but the bank apparently doesn't fit into PL Capital's plans. They also threw in the towel on perennial underperformer HopFed Bancorp (HFBC). I am holding my shares, but I understand the frustration with the bank.
Since the end of the quarter, PL Capital has filed a 13D announcing a 6.4% ownership in one of my favorite Florida bank picks, Atlantic Coast Financial (ACFC). The activist form said that they "acquired the Common Stock because it believes the Common Stock is undervalued. The PL Capital Group intends to discuss with the management of the Company what their short and long term plans are to grow the franchise and improve profitability, and then monitor their progress at implementing those plans over time."
Following PL Capital's filings every quarter is an invaluable way to find stocks that will allow you to profit from the trade of the decade in small regional and community bank stocks.