Joshua Byrini's Market View
Byrini's obeservations should not be considered recommendations, advice or suggestions to buy, sell or hold securities, commodities, commodity contracts, options, futures, warrants, insurance contracts, real estate, gemstones, art work or derivatives, as he is neither a registered securities, commodities or real estate broker, diamond merchant, art dealer, or investment advisor. These observations are for informational purposes only. In other words, you are on your own chief.Monday, January 16, 2006
Bank Jobs-- buying Banks
Is that all, Archie?
MacAllaster: I have one more, a real speculation. It's a Providence, R.I., savings and loan, Old Stone, which was founded in 1819 and filed for bankruptcy in 1993. The bank took over some thrifts in the 1980s and the government allowed it to use its goodwill as capital. In 1992, the government changed its mind and forced Old Stone into bankruptcy. The bank sued and just over a year ago the federal court found in their favor for $192.5 million. The government waited for the last day it could appeal, and did.
The company has two securities outstanding -- about eight million shares of common, and one million of cumulative preferred. The preferred is $20 par and sells for about $37. But it has $34 a share in arrears on it. The case will be resolved this year or next. With the arrears, the bank would have to pay $57 million to the preferred shareholders. If they get the full $192 million, they'd be left with $140 million less lawyers' fees, leaving $80 million to $100 million for the common.
What does that sell for?
MacAllaster: The common sells for $2.90 to $3.10. You have a great chance to make money on it. Even if they settle or the court finds they're entitled to less, you will get more than your money back. On the preferred you should get it all back. But be careful. It trades thinly, about 5,000 shares a day. I would not pay more than $3.50 a share. I think you will get $8 to $10 for it.
