www.BANKSTOCKS.com
Tom Brown's bankstocks.com
I first began paying attention to bank stocks as a group after doing an interview with Cassandra Tororian, the former sell-side bank stock analyst who founded Financialmuse.com, an online bank, brokerage, and financial resource designed especially for women. As Tororian said in that interview back in March 2001 about bank stocks:
The funny part was, when you go through business school they teach you how to read the balance sheets and income statements of companies. But banks? Banks are totally different. Their balance sheets are the complete opposite of any other company out there.
So if analyzing banks -- and more than that, analyzing bank stocks -- threw a talented young business school student for a loop (Tororian was among the few shrewd enough to invest in America Online back in 1995), then you can imagine how much trouble the rest of us might have in trying to sort the banking wheat from the banking chaff.
FIGURE 1: HOME PAGE OF TOM BROWN'S BANKSTOCKS.COM
Fortunately, that's where Tom Brown's Bankstocks.com comes in. Bankstocks.com ("Your source for independent insights on the financial services industry") uses the blog format to provide "Thoughts and Comments" as well as "Quick Takes" on businesses and shares of banks, savings and loans, brokerages, and other (usually) publicly owned financial institutions.
The "Thoughts and Comments" are written by members of the Bankstocks.com team, a squad of former analysts, research associates, and investment banking specialists, as well as other contributors such as Eric Miller (formerly of Donaldson, Lufkin & Jenrette). These tend to be longer pieces on topics ranging from the relationship between what Ceos say about their companies and what CEOs actually do ("The De Molina Rally") to the Bankstocks Booklist, which takes a look at publications that might be of interest to those interested in the world of banking and finance (William Poundstone's Fortune's Formula: The Untold Story Of The Scientific Betting System That Beat The Casinos And Wall Street is one recently reviewed tome).
Quick Takes bring more of the blog aesthetic to the website. While the candor in the Thoughts and Comments section is not trumped (as one might predict) by the short blog entries that make up the Quick Takes, the "Daily WebLog" -- as the quick takes section is called -- does have a certain knack for getting straight to the point in a way those of us who have fallen in love with weblogs have come to expect and appreciate. For example, when was the last time you were reading this kind of "straight talk" in the mainstream financial media?
Buyback Blarney: Sell-side analysts looking for an early New Year's resolution might consider the following suggestion: please, please quit getting so worked up about company share repurchases. Unless the buybacks are huge and persistent, they almost never end up doing shareholders much good.
As someone who has heard more than a few financial market players go ga-ga over reports that a company would be buying back shares (with the small print adding that said repurchases were anticipated to be extended over a period of time subject to any variety of special conditions), I'll admit to laughing out loud when I read that dispatch from Bankstocks.com team member Zack Maxfield. Is it too much to say that if investors in Internet stocks had been fortunate enough to have this sort of commentary back in 1999, things might have turned out differently for that crop of people still occasionally referred to as the "investor class"?
INSIGHT INTO A MYSTERIOUS WORLD
All this insight and candor come to us courtesy of Tom Brown, founder of Bankstocks.com and a former top banking industry analyst who tells us that launching a free website like Bank stocks.com serves at least two purposes. First, there is pure generosity. As he writes, "When I uncover an attractive, well-run company, I like to share my discovery with others." The second reason comes from the same spirit, namely that Brown plain loves the business and enjoys hearing from others who are as passionate about the financial services industry as he is. That includes those who don't know a great deal about the financial services industry beyond the well-crafted brokerage and banking commercials. In this, Tom Brown's Bankstocks.com is a place for industry veterans with an observation or tale to tell, as well as for those average retail investors and potential financial services customers looking for insight into a world that likely has appeared impervious to understanding.
Beneath this goodwill are some hard and cold realities about writing about banks and bank stocks in the post-bubble investment world. And on this score, Bankstocks.com is clear about the potential for conflicts of interest. As such, the website avoids trading in stocks immediately before or after posting commentary about them. This sort of 24-hour cooling period is not uncommon among those who provide commentary -- particularly free commentary -- about stocks while retaining the right (understandably, in my opinion) to take advantage of their own insights. To steal a classic line from The Godfather, "After all, we are not Communists."
At the same time, Bankstocks.com doesn't want readers to believe that everything they know (or think or hope) about a given stock or company will become grist for a story about said stock or company. While this is somewhat commonsensical, it is probably worth pointing this out. In the same way, it is no less worth pointing out that Bankstocks.com might write positive articles about companies they have no interest in and negative articles about companies in which they may end up taking a position.
In addition to the longer pieces and the shorter notes, Bankstocks.com has a directory of presentations that Tom Brown has made in front of what he calls "senior management groups, boards of directors, and industry gatherings" back to February 2005. Unfortunately, for most of the website's readers, these presentations are available only to those who were "attendees of our recent presentations." In other words, the only people who can see them are people who have already seen them.
While I understand these presentations were privileged events, I can't help but feel as if perhaps making some of the older presentations available to Bankstocks.com's other website visitors might not be a boon for those looking to gain greater insight into the financial services industry as well as for Tom Brown and the Bankstocks.com team, who might gain more opportunities for such presentations were the contents of those presentations more widely known and appreciated.
Archives round out the offerings. Chronicling Bankstocks.com dispatches since November 2004, the archives are another way for website visitors to get a cross-section of what the website has been doing since its articles began regularly appearing.
There's been a great deal of talk about how much information that investors have when dealing with the stock market of the 21st century compared with the market of decades past. The revolution in brokerage-client relationships, the revolution in information technology, and the bull market of the past 20 years have all played a major role in creating the kind of investor that would have been almost inconceivable in the 1960s or 1970s. And in its own way, Bankstocks.com is a part of that revolution in transparency, access, and information that continues to make average investors, speculators, and traders just that much more capable of taking advantage of the opportunities that a free market in equities and ideas has to offer.
--David Penn, Technical Writer
Originally published in the February 2006 issue of Technical Analysis of STOCKS & COMMODITIES magazine. All rights reserved. © Copyright 2006, Technical Analysis, Inc.