Value Expert Banks on Banks
Contrarian investing specialist Benj Gallander looks for long-term, deep value situations; here, the editor of Contra the Heard looks at the banking sector and highlights four favorite stocks.
Steven Halpern: Our guest today is Benj Gallander, a value investing expert and editor of Contra the Herd newsletter. How are you doing today, Benj?
Benj Gallander: I am doing very well, Stephen, how about yourself?
Steven Halpern: Very good. Thank you for taking the time today. Your long standing expertise involves out of favor stocks. Could you tell us a little about this turnaround-type strategy?
Benj Gallander: We look at companies that are out of favor. Effectively, deep value plays, so for the portfolio that I manage, I only buy into companies that have been around for, at least, ten years. I’m very debt adverse so I like buying into companies that have low debt or zero debt.
We look very carefully at financial ratios, at the management of the company, but I don’t buy anything that’s new and exciting. It’s all companies that have traded at much higher prices.
I’m always looking for gains of 100%, 200%, 300% plus and all the companies that I buy into have traded at those much higher levels in the past.
Steven Halpern: So, in order to get that type of return, you’re willing to buy and hold onto for the long-term.
Benj Gallander: Well, to a degree, our average hold time is about three and a half years and some people say that that’s an awfully long period of time, especially with all the technology now and everything being quicker and quicker.
There are some companies in the past that I’ve held for over ten years, but often their returns have been 400% to 500%, some with dividends, so it certainly is worthwhile to hold if those circumstances present themselves.
Sometimes I get lucky and sell a company within a year when I buy it, but that really doesn’t happen all that often.
Steven Halpern: Now, one sector in which you do see long-term potential is the US banking area.