Outspoken and prolific banking analyst Dick Bove has made a bid for personal victory.
Having been sued in July 2008 by BankAtlantic Bancorp for defamation and negligence over a note written for his previous employer, Ladenburg Thalmann, titled “Who Is Next” - the analyst is doing one big I told you so, via his new employer, Rochdale Securities.
Here’s what Bove says in his latest Rochdale note:
On July 14, I published a comment listing two “Bove” ratios as indicators of banks that might be in danger.
1. The first ratio divided non-performing assets by outstanding loans. A ratio over 5% was considered to be dangerous.
2. The second ratio divided non-performing assets by common equity plus reserves. A ratio over 40% was considered to be dangerous.
I am currently paying $50,000 per month in legal fees for publishing this [July 2008] comment. Plus, I was investigated by FINRA for publishing this comment.
The two tables below show the 20 banks with the worst ratios in each category as calculated on July 14, 2008 and what has happened to their stock prices since then.
We shouldn’t show you the two tables in full — the status of BankAtlantic’s suit against Bove is unclear according to recent reports — but here’s a quick summary.
Of the 20 banks in Bove’s 5 per cent ratio category, six have failed. Twelve have suffered share price drops of between 9 and 94 per cent. Two — Park National and First Horizon — have experienced stock price gains, of 14.1 and 97.3 per cent respectively.
In the 40 per cent ratio category (which includes many of the same banks as the 5 per cent category), seven of the 20 have failed. Twelve banks have also had decreases in their share prices of between 9 per cent and 94 per cent. Just one — First Horizon again — had a stock price increase.
Is 13 out of 40 not bad?
Related links:
Analysts’ audacity floors firms - FT Alphaville
The perils of instant analysis - FT Alphaville
Issue negative research report, be accused of trade libel - FT Alphaville
