Disclosure: Long INBK (may buy more or sell at anytime)
We got the big bounce I was looking for after yesterday and I sold some prior day's purchases (SPY and XLE). In other news, BOFI - Bank of Internet is now AXOS financial AX (but I am having a hard time using the new ticker/name after 12 years of BOFI) and released earnings yesterday. The numbers were not the greatest and stock is getting knocked down. First Internet Bank (INBK) had similar #'s at 61 cents for the Q but INBK has already been knocked down to below tangible book value and (hopefully) has little room to fall further. INBK is more of a value story and AX has recently been the big growth story. Unfortunately for AX their tangible book is $14.59/share which is a steep drop from current quotes around $27/share. INBK is trading around $25.50 with a tangible book of $27.80. Of course AX will most likely get their growth story back on track and therefore deserves a higher valuation (also AX has a much better ROA and ROE than INBK), however I won't be buying AX until the bloodbath and recession we are due for is in full force (of course leading economic indicators state I will be waiting awhile for that to happen). Remember that the yield curve will probably invert some time after January 1st which means these banks will have a harder time with their margins. Also when the inevitable recession hits the loan loss reserves go way up, knocking earnings down to scraps (and possible negative #'s). So I feel safe trading (and possibly building positions) in INBK but not yet for AX.
Disclosure: Long INBK (may buy more or sell at anytime) Comments are closed.
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Paul SaadSenior Manager, Paul Saad and Associates, LLC Archives
May 2020
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