This post by MOI Global instructor Phil Ordway has been excerpted from a letter of Anabatic Investment Partners, based in Chicago, Illinois.
Phil presented his in-depth investment theses on Community Banks, OceanFirst (Nasdaq: OCFC), Wells Fargo (NYSE: WFC) at Best Ideas 2017. Replay here.
Our portfolio activity during the first half of 2018 was modest. In January we sold our remaining Wells Fargo TARP warrants and in June we began a new investment in a small community bank.
The overall banking environment remains favorable, and most banks have excellent credit profiles backed by ample reserves, liquidity, and capital. My contention remains that the U.S. banking industry is better capitalized and safer overall than at any other point in its modern history. The next downturn – when it comes – won’t necessarily look like the previous one, and I believe many banks will not just survive but prosper. In the meantime, local economic conditions, business fundamentals, and market valuations are providing plenty of dispersion and I continue to find attractive opportunities in community banks.
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Gross Long and Gross Short performance attribution for the month and year-to-date periods is based on internal calculations of gross trading profits and losses (net of trading costs), excluding management fees/incentive allocation, borrowing costs or other fund expenses. Net Return for the month is based on the determination of the fund’s third-party administrator of month-end net asset value for the referenced time period, and is net of all such management fees/incentive allocation, borrowing costs and other fund expenses. Net Return presented above for periods longer than one month represents the geometric average of the monthly net returns during the applicable period, including the Net Return for the month referenced herein. An investor’s individual Net Return for the referenced time period(s) may differ based upon, among other things, date of investment. In the event of any discrepancy between the Net Return contained herein and the information on an investor’s monthly account statement, the information contained in such monthly account statement shall govern. All such calculations are unaudited and subject to further review and change. For purposes of the foregoing, the calculation of Exposure Value includes: (i) for equities, market value, and (ii) for equity options, delta-adjusted notional value.
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