Berkowitz on financial holdings: it's all just a little bit of history repeating

Well, to me, it's very much déjà vu all over again with the financials. This is exactly what I did in the early 90s. It's very reminiscent of the early 90s. And how can you not buy companies selling tangible book value that are essential to the country?

~Bruce Berkowitz, founder, Fairholme Funds, CNBC interview, June 9, 2011

Value investor Michael Price is bullish on GS

Some of the ugly ducklings, Goldman Sachs, Bank of America, people hate, they're in the press -- negative press -- never leave Goldman alone. Goldman more or less bottomed at $50 but was $80 or so during the real crunch. You know what Goldman's earned since mid-'08? Thirty-five bucks a share. The stock's $150 they're earning twenty bucks, right? Book is $130, we own Goldman, we buy Goldman on dips.

I think Goldman's a great, large cap financial value-guys' stock. Same thing with B of A.

I'm a sum of the parts guy, smart guy's running it. I hated the Senate report, the investigation report. Some of it read very poorly. But it's given them a lot of religion about how they treat clients and how they appear in the press. I'm a sum of the parts guy, you've got three or four distinct divisions. They're all over-capitalized. Great asset management business, amazing investment bank. I think more powerful than GreenHill, and you look at GreenHill's multiple. So you apply a normal 18 P/E on their asset management business, maybe a 25 or 30 P/E versus GreenHill's 40 on the M&A advisory business, and you're sitting on the broker-dealer for nothing. With excess capital.

Okay, see that dip [in the crash of '08]? That was an aberration. But you look in the middle of the dip, it was 80 or 90, they've earned thirty-five bucks a share since. I don't think the dividend is the story here. I think it's just an earnings-driven story in this expanding economy where the world needs financiers like a Goldman.


~Michael Price, president of MFP Investors LLC, Bloomberg's "Surveillance Midday", May 3, 2011

Bill Miller: Countrywide Financial is worth $40 per share (2007)

After falling 20% in a only a few days on no news, and this after being down 50% for the year, CFC rallied over 30% in one day once they reported their results and indicated they would be profitable for the 4th quarter and expect to earn a reasonable return on equity of 10-15% for all of 2008. The price action on both sides was driven by emotion -- first fear, then relief -- and was hardly the result of a careful analysis of Countrywide's long term business value. That, by the way, we think is in the $40's compared to its current price of about $14-15.

~ Bill Miller, Legg Mason Value Trust 3rd Quarter 2007 letter, "Bill Miller: Countrywide Financial Is Worth $40/Share," Seeking Alpha, November 4, 2008

(Countrywide was acquired by Bank of America for less than $5/share in stock in July, 2008.)

Bill Laggner on valuation traps

MBIA, the municipal bond insurer, looks cheap at 11x earnings and 1.4 x book value, but when you look at the balance sheet, which very few people look at today, you see that it’s levered 94 to 1. The statutory capital that they keep on hand is 3.5 basis points of their bond guarantees. Compare that to Citigroup, which has almost 9.5 basis points of reserves. Ten years ago just 14% of MBIA’s business came from structured finance guarantees on asset backed securities. Today that number is 32%. Of course the structured finance world is all based on numerous assumptions, including stable interest rates and low default rates. We would say that those are very generous assumptions.

~ "Value Traps Revisited," Dollarcollapse.com, December 21, 2007